Gold, Gold ETFs and What Your ETFs Own
Nate Geraci
October 29, 2011
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Is Your Actively Managed Mutual Fund Just an Index Fund in Disguise?
Nate Geraci
October 27, 2011
A recent article from The Motley Fool highlights a problem with actively managed mutual funds that many investors may not have considered – they may be paying exorbitant fees for active management in a mutual fund that has much more in common with a passive index. As the article more eloquently states:
“Unbeknownst to many investors, lots of mutual funds are pulling a fast one, grabbing more money in annual fees than they really deserve. The problem is closet-indexing, which happens when a fund has too much in common with the S&P 500 index of 500 of America’s biggest companies, or with some other index that serves as its benchmark.”
As we’ve pointed out many times in the past, passive indexes typically outperform actively managed mutual funds. So, what’s the problem then if these mutual funds are simply hugging a benchmark index? Fees.
Since the average expense ratio on actively managed mutual funds is well north of 1%, you may be paying premium prices for performance that you can get much cheaper with an ETF, such as the SPDR S&P 500 ETF, ticker SPY, with an expense ratio of .09%.
This appears to be more than just an isolated issue which makes you wonder if the active mutual fund managers are finally coming to their senses and concluding “if you can’t beat them, join them”. The only problem is that they’re not telling you that and they wouldn’t mind if you paid them extra as well. Hardly a great deal. No wonder that investors continue to pull money out of mutual funds and put it to work in ETFs.
ETF Store Show Recap – 10/22/11
Nate Geraci
October 26, 2011
Listen to The ETF Store Show every Saturday at 4pm on KCMO Talk Radio 710AM as we cover everything you need to know about Exchange Traded Funds and the world of investing.
On our most recent radio show, we concluded our series of case studies on how we believe individuals at different stages of their lives should be approaching investing and planning for retirement. For our last case study, we focused specifically on those individuals just getting started out in their careers who need to begin the process of building wealth and investing for their future. ETFs can be the perfect investment for these individuals because of the ease in which you can build a well-rounded portfolio with only a handful of ETFs.
For many individuals just starting out, the process of beginning to build a nest egg and planning for retirement can be a daunting task, so we explained how ETFs can actually make this process easier and less stressful. When you consider the low cost structure of ETFs, the transparency of ETFs, and the ability to build highly diversified portfolios, it becomes clear why The ETF Store believes they’re the best way to approach retirement rather than with more expensive actively managed mutual funds where you don’t always know exactly what you’re holding and where you may be at the mercy of an underperforming fund manager.
Listen to the full show here.
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ETF Store Show Recap – 10/15/11
Nate Geraci
October 18, 2011
Listen to The ETF Store Show every Saturday at 4pm on KCMO Talk Radio 710AM as we cover everything you need to know about Exchange Traded Funds and the world of investing.
On our most recent radio show, we interviewed Michael Johnston, the founder of ETF Database which is one of the most heavily trafficked websites in the ETF industry. We discussed the various ETF analytical tools offered on his website, etfdb.com, and also delved into Michael’s thoughts on the ETF industry in general. Michael is extremely well versed in ETFs and has been quoted in publications such as Barron’s, US Today, The Wall Street Journal, and CNBC.com.
We discussed how ETF Database tools such as the Mutual Fund to ETF Converter and ETF Screener can help investors transition their expensive mutual fund portfolio to less expensive ETFs. Michael also provided his thoughts on where the rapidly growing ETF industry is heading along with some ETFs for investors to consider as part of the foundation of a well-diversified portfolio.
Listen to the full show here.
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