Welcome to the ETF Prime Podcast

ETFs Explained

If you’re new to ETFs, CNBC recently released an excellent short video providing a nice overview on Exchange Traded Funds and their potential benefits compared to mutual funds.  Watch below:

http://video.cnbc.com/gallery/?video=3000147234

For additional information on ETFs and how they compare to mutual funds, download our free report “The ETF Advantage” by clicking here.

Ari Weinberg Stops By 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.

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On our most recent radio broadcast, Ari Weinberg, contributor to The Wall Street Journal, joined us to discuss his recent article “Firms Try Varied Designs to Add ETFs”.  As investors continue to gravitate towards ETFs, traditional mutual fund companies are seeing the writing on the wall and searching for the best way to launch new ETF products.  Ari offered some thoughts on what’s driving mutual fund companies to enter the ETF space and explained the three primary options that these firms are considering to launch ETF versions of existing mutual funds or new funds altogether.  Ari also chatted about an interesting article that we discussed last fall, “What ETFs Next Act Will Look Like”, where he examined what investors might expect to see from ETFs over the next five years.

In our weekly market update, we spent a few moments digging into last year’s performance from mutual funds, ETFs, and even hedge funds.  While we’ve talked about the underperformance of mutual funds on past shows, the data from 2012 – particularly from hedge funds – continued to highlight the challenges active managers face in trying to outperform the market.  Lastly, in our ETF spotlight segment, we highlighted a country specific ETF (WisdomTree Japan Hedged Equity ETF – ticker DXJ) that not only hedges its currency exposure, but also has a unique way of weighting the individual stocks that it holds.

ETF Game Changer from Schwab

Charles Schwab, in a move sure to ripple across the entire ETF industry, announced on Thursday the launch of Schwab ETF OneSource, described as “a new ETF platform that gives investors and advisors access to the most commission-free ETFs anywhere in the industry”.  For all of the potential benefits that ETFs can provide investors – from lower costs and greater tax efficiency, to more transparency and better diversification – one knock has always been trading commissions.  Since ETFs trade on the exchanges, just like individual stocks, investors typically must pay a trading commission when buying or selling shares.  With the rollout of Schwab’s ETF OneSource platform, investors can buy or sell shares of 105 ETFs – including all 15 of Schwab’s ETFs – without incurring trading commissions.

While Schwab isn’t the first to rollout such an offering (TD Ameritrade already offers 101 commission free ETFs), the introduction of Schwab ETF OneSource further signals the arrival of ETFs at a time when mutual funds continue to cede assets to ETFs.  Said Charles Schwab’s CEO Walt Bettinger, “Just as Schwab Mutual Fund OneSource changed the landscape for investors and advisors by providing convenient, affordable access to leading mutual funds when Chuck Schwab introduced it twenty years ago, we believe Schwab ETF OneSource will deliver enormous benefit and change the way our clients buy and sell ETFs”.  While mutual funds may have been the preferred way to go for investors 20 years ago, Schwab seems to be acknowledging that investors are now gravitating towards ETFs.

The reasons why investors are moving to ETFs are plentiful.  As Bettinger explained in Schwab’s announcement, “Today’s investors, and the advisors who serve them, want sophisticated, low-cost strategies and more control over their investment choices and outcomes”.  At The ETF Store, we believe ETFs provide us with the ability to offer more sophisticated, lower cost strategies to our clients while at the same time allowing a greater level of control over things such as active manager risk, buy/sell decisions, and taxable events.  As we discussed with Schwab’s Director of ETF Capital Markets back in October, investors continue to be the clear winners of the continued innovation and competition in the ETF space.  With Schwab’s ETF platform, it’s our belief that the benefits of ETFs for investors just keep getting better.