ETF Prime Archive

ETF Store Show Recap – 11/05/11

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 explained why the European Debt Crisis matters to your investments and suggested some ways that you can navigate through these volatile markets.  We also discussed the following topics:

• How to generate income in your portfolio using ETFs
• Investing in an individual stock versus an ETF that holds that particular stock

Listen to the full show here.

Podcast: Play in new window | Download

ETF Store Show Recap – 10/29/11

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 discussed the recent surge in both the equity markets and the price of gold and suggested some gold ETFs you might want to consider.  We also spent some time answering a number of questions we commonly receive regarding ETFs.  Among the questions we covered were:

• What do ETFs actually own?
• Do ETFs pay dividends and interest?
• Are ETFs any riskier than mutual funds?

Get the answers to these and other ETF related questions by listening to the full show here.

Podcast: Play in new window | Download

Is Your Actively Managed Mutual Fund Just an Index Fund in Disguise?

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.