ETF Database » DJP

How ETF Investors Can Save $415 Million (Without Breaking A Sweat)

Michael Johnston — Tue, 15 Nov 2011 12:00:44 +0000

Financial advisors and individual investors who have embraced ETFs are generally painted as a cost conscious crowd, passing over expensive active mutual funds in favor of cheap indexing strategies. In general ETFs are considerably cheaper than mutual funds, thanks not only to the indexing strategy but also to the more efficient exchange-traded structure. But not all ETFs and ETNs are equally tax efficient; in many cases, the differential between products offering similar exposure can be meaningful. In fact, there are several examples of products linked to identical indexes with wildly different expense structures. And while there has been a movement towards cheaper products, a number of more expensive ETFs remain tremendously popular. So much so that movements from a handful of funds to lower cost alternatives could result in aggregate annual savings of more than $400 million in management fees–without altering the underlying index [see 25 Things Every Financial Advisor [...]

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One Year Later: USCI Remains An Intriguing Commodity ETF

Michael Johnston — Fri, 12 Aug 2011 11:00:31 +0000

Though the entire ETF industry has grown at a blistering pace, certain segments of the market have expanded much more quickly than others over the past few years. Few types of financial products have seen stronger asset growth than commodity ETPs, as investors of all sophistication levels have embraced the exchange-traded structure as the most efficient means of accessing an asset class that has become increasingly popular as a source of both diversification benefits and return enhancement. And one of the most exciting new product introductions in this corner of the market came about a year ago when United States Commodity Funds rolled out USCI, a fund dubbed by many as a “contango killer.” Billions of dollars have flowed into commodity ETPs in recent years, as nearly every type of natural resource has delivered sharp increases in price thanks to rising demand for raw materials from many of the world’s emerging markets. [...]

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How Balanced Is Your Commodity ETF?

Michael Johnston — Mon, 16 May 2011 11:00:08 +0000

As natural resource prices have climbed skyward, interest in exchange-traded products that offer exposure to commodities has accelerated as well. While some investors prefer to achieve targeted access through resource-specific funds–such as those focusing on corn (CORN), sugar (SGG), or copper (JJC)–the most popular commodity ETPs are those that include a variety of types of resources. There are currently about a dozen products in the Commodities ETFdb Category, a group that includes ETPs targeting multiple types of commodities. And while these products are similar in that they employ a broad-based technique to delivering commodity exposure, they are far from identical. The commodity asset class can generally be divided up into five separate sub-sectors: energy, agriculture, industrial metals, precious metals, and livestock. Each of these groupings offers unique risk/return profiles; precious metals may have appeal as safe havens, while industrial metals tend to move in unison with global demand for raw [...]

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All-ETF Portfolio For Cheapskate Investors: How Low Can We Go?

Michael Johnston — Fri, 08 Apr 2011 14:00:20 +0000

Any investor who hasn’t been living under a rock probably has some idea as to why the ETF industry has been expanding so quickly over the last several years. Intra-day liquidity, enhanced tax efficiencies, and a degree of transparency not available in many other structures are all common causes of the explosive growth in both number of products and ETF assets over the past decade. But the big driver of the ETF expansion relates to expenses–or perhaps more accurately, the lack thereof. ETFs were originally designed (at least in part) to combat what Vanguard founder John Bogle has called the “tyranny of compounded costs.” For investors who believe that security selection fails to consistently add value–and there is a boatload of academic evidence that supports that theory–paying for pricey active management does little more than erode returns over the long run. Most ETFs are passive in nature, meaning that they [...]

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ETF Investors Are Embracing Low Cost Options…Or Are They?

Michael Johnston — Mon, 24 Jan 2011 14:00:06 +0000

When running down the benefits of constructing a portfolio with ETFs, most investors will touch on the potential for enhanced tax efficiency, intra-day liquidity, and transparency in holdings. But the biggest benefit, in the minds of those accustomed to using primarily actively-managed mutual funds, are the low expense ratios. Most passively-indexed ETFs charge fees equal to only a fraction of the expense ratios levied by actively-managed products, making them ideal securities for investors convinced by the boatloads of academic evidence suggesting that active management fails to add value over the long term. Some investors making the switch assume that any ETF they buy will be considerably cheaper than a comparable actively-managed mutual fund, and pat themselves on the back for lowering their overall expenses. But as more and more ETF investors are realizing, all ETFs are not created equal from an expense perspective, and the gap between many similar or [...]

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Ten New Years’ Resolutions For ETF Investors

Michael Johnston — Thu, 30 Dec 2010 12:00:09 +0000

With 2011 just around the corner, tis the season for pledges to better everything from health to wealth to happiness in the coming year. Below, we offer up ten New Years’ Resolutions for ETF investors looking to cut expenses, round out their portfolios, and maximize returns in 2011 [for more ETF insights, sign up for our free ETF newsletter]: 10. Slim Down Your Expense Ratios If you’ve already made the jump away from pricey active mutual funds to more cost-efficient ETFs, our Mutual Fund To ETF Converter might not be of much use. But just because you’ve embraced ETFs in an effort to become a more cost conscious investor doesn’t mean that you’ve done all you can to trim your expense ratio. Some of the gaps between expense ratios of similar or even identical ETFs are wide enough to drive a truck through, meaning that there may be opportunities to [...]

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Ten Commandments Of ETF Investing

Michael Johnston — Thu, 21 Oct 2010 11:05:53 +0000

As ETFs have burst on to the scene in recent years and worked their way into the investing mainstream, the number of products available and complexity of exposure offered has increased significantly. Advisors and investors have taken steps to educate themselves on the ins and outs of ETFs, but many are still scrambling to play catch-up and unaware of the complexities these products can present. What began as a handful of securities seeking to replicate widely-known stock and bond indexes has grown into a lineup of more than 1,000 funds, offering exposure to nearly every asset class, region, and investment strategy imaginable. While this impressive growth has enhanced the arsenal of securities available to ETF investors, it has also created the potential for misuse and made finding the right ticker symbol a bit more challenging. And while ETFs offer countless potential advantages relative to strategies that revolve around mutual funds [...]

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Closer Look At The “Third Generation” Commodity ETF

Eric Dutram — Thu, 07 Oct 2010 14:00:56 +0000

As the ETF world has surged ahead in recent years, perhaps no corner of the industry has generated as much interest as the commodity space. The introduction and proliferation of exchange-traded commodity products has granted many investors access to a section of the investable universe that was previously beyond their reach. The democratization of an asset class with the potential to add valuable diversification benefits to traditional stock-and-bond portfolios has been met with open arms–and open wallets. Inflows to commodity ETFs topped $30 billion in 2009, and the cash flows have remained strong for much of this year as well. But the impressive expansion of the commodity ETF space hasn’t occurred without a few growing pains. Commodity ETFs have been the targets of some significant investor frustrations and unflattering press coverage. The most scathing critique came from BusinessWeek, which detailed the confusion that exists related to the nuances of futures-based [...]

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Five Things BusinessWeek Didn’t Tell You About Commodity ETFs

Eric Dutram — Thu, 29 Jul 2010 19:40:42 +0000

As a long-time subscriber to BusinessWeek, I generally enjoy their content and find their stories both informative and interesting. However, last week’s cover story entitled “Amber Waves of Pain” was unlike anything I had ever read by the company before. On the cover, the weekly magazine stated three times “Do Not Buy Commodity ETFs” and then encouraged subscribers to read more about “America’s Worst Investment” inside the issue. Needless to say, I was intrigued to see how a the magazine could make such a blanket statement over such a large segment of the market which by BusinessWeek’s own estimation has seen $277 billion in inflows by the end of last year. Admittedly, the magazine made a pretty good case of the problems which some of the largest futures-based commodity funds deal with. The article started by highlighting several issues which investors have become very familiar with in recent years such [...]

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ETN Investing: Facts And Fallacies

Michael Johnston — Thu, 06 May 2010 18:01:58 +0000

When referring to the impressive rise of the ETF industry or discussing the benefits of ETF investing, many investors use the term “ETF” incorrectly. While the majority of the 900-plus exchange-traded products listed in the U.S. are true 1940 Act exchange-traded funds, there are dozens of securities structured slightly differently, including exchange-traded commodities and currency grantor trusts. But the most popular cousin to the ETF is the exchange-traded note (ETN), a structure that provides many of the benefits of ETFs but that features some key differences as well (see Five ETNs Investors Love). ETN Investing 101 The use of ETNs is clearly on the rise; according to the April data from the National Stock Exchange, there are now 93 ETNs, up from 85 a year ago. Of these products, 15 have more than $100 million in assets , and several are among the largest and most heavily-traded exchange-traded products. The [...]

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ETF Database » DJP

How ETF Investors Can Save $415 Million (Without Breaking A Sweat)

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One Year Later: USCI Remains An Intriguing Commodity ETF

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How Balanced Is Your Commodity ETF?

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All-ETF Portfolio For Cheapskate Investors: How Low Can We Go?

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ETF Investors Are Embracing Low Cost Options…Or Are They?

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Ten New Years’ Resolutions For ETF Investors

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Ten Commandments Of ETF Investing

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Closer Look At The “Third Generation” Commodity ETF

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Five Things BusinessWeek Didn’t Tell You About Commodity ETFs

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ETN Investing: Facts And Fallacies

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