ETF Prime Archive

Vanguard’s Jim Rowley Joins Us to Talk ETFs

Listen to The ETF Store Show every Tuesday at 9am on ESPN 1510 as we cover everything you need to know about Exchange Traded Funds and the world of investing.

Click here to listen to The ETF Store Show now.

On our most recent radio broadcast, Jim Rowley, Sr. Investment Analyst at Vanguard, joined us to discuss Vanguard’s approach to Exchange Traded Funds and some of the key factors driving the continued growth of the industry.  Vanguard is currently the third largest ETF provider behind only iShares and State Street and through the end of May, Vanguard has seen the largest inflows of ETF investor dollars this year.  Vanguard founder Jack Bogle is well known for his belief that low cost, index-based investing is the best way to achieve long-term investment success.  Vanguard built themselves into the country’s largest fund company based largely on this philosophy.  On the show, we discussed this philosophy and delved into Vanguard’s recently released research paper titled “Cost matter:  Are fund investors voting with their feet?”.  Vanguard found that “in response to investor interest, assets held in U.S. equity index funds and ETFs almost doubled over the decade, from 18% of all assets under management to 34%.”  Vanguard also examined where investors were placing their money based on how much the mutual fund or ETF costs and found that “the lowest expense ratio quartile attracted $292 billion of the cumulative net cash flow into all U.S. equity funds for the ten years ended December 31, 2012.  Funds with higher expense ratios (quartiles 2, 3, 4) suffered net cash outflows of about $368 billion.”

We also touched on a recent Wall Street Journal article by Burton Malkiel, author of the classic investment book A Random Walk Down Wall Street.  Mr. Malkiel penned the following:  “The quintessential low-cost investment vehicles are index funds, which should comprise the core of every investment portfolio.  The high fees charged for active management cannot be justified.”  He went on to say, “Over long periods, about two-thirds of active managers are outperformed by the benchmark indexes.  The one-third that may outperform the passive index in one period are generally not the same as in the next period.”  Mr. Malkiel is certainly not alone in his beliefs.  It’s clear that Vanguard shares these beliefs and we certainly share them here at The ETF Store.  They’re one of the main reasons we use Exchange Traded Funds in our client portfolios.

In our market update, we explained the recent selloff in stocks, bonds, and even alternative assets and offered some thoughts on what may lie ahead.  In our weekly ETF Spotlight segment, we examined the Vanguard Emerging Markets ETF – ticker VWO, an ETF offering exposure to over 1,000 emerging market stocks for a paltry 0.18% expense ratio.  We also discussed where emerging market stocks might fit into an investor’s portfolio.  Learn more about VWO by visiting www.etfbuzz.com.

IndexIQ CEO Adam Patti on ETFs

Listen to The ETF Store Show every Tuesday at 9am on ESPN 1510 as we cover everything you need to know about Exchange Traded Funds and the world of investing.

Click here to listen to The ETF Store Show now.

Exchange Traded Funds are continuing to evolve and individual investors are reaping the benefits.  Investment options that were previously reserved for only the most wealthy, sophisticated, institutional investors are now being made available to all investors through ETFs.  As we like to say at The ETF Store, with their combination of lower costs and access to an enormous range of investments and investment strategies, ETFs have democratized investing.  On our most recent radio broadcast, IndexIQ CEO Adam Patti joined us to discuss their lineup of liquid alternative ETFs which have helped bring some of these institutional caliber strategies to the broader investment marketplace.  IndexIQ offers several hedge fund style ETFs in addition to some interesting commodity and small cap equity ETFs.  Adam explained where these alternative ETFs might fit in your investment portfolio and he also offered some thoughts on where additional innovation in the ETF industry may come from.

In our market update, we explained how even though the stock market has felt more like a roller coaster ride than a place to invest money over the past month, investors must be careful not to overreact to the wild swings.  While volatility has certainly picked up, the fact remains that the Dow Jones Industrial Average is essentially flat since the Fed first hinted at tapering bond purchases back on May 22nd.  Unfortunately, the financial media might have you believe that the market is down significantly over this period of time.  The lesson for investors is that you need to ensure you have a well thought out, disciplined investment plan in place and not make rash moves based on news headlines or day-to-day price swings.  In our weekly ETF Spotlight segment, given our focus on IndexIQ ETFs, we examined a hedge fund style ETF that is the largest of its kind (IQ Hedge Multi-Strategy Tracker ETF – Ticker QAI).  This particular ETF offers investors exposure to several hedge fund strategies in an attempt to generate returns regardless of market conditions.  Learn more about QAI by visiting www.etfbuzz.com.