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Tax Efficiency Report Card

Daniela Pylypczak — Tue, 10 Jan 2012 12:00:24 +0000

The year-end periods provides the ETF industry with a couple of opportunities to flex its collective muscle; performance comparisons generally tend to favor those products with lower expense ratios–a defining feature of exchange-traded funds. But early January also puts another benefit of exchange-traded products into focus: enhanced tax efficiency relative to traditional mutual funds. The nuances of the exchange-traded structure have the potential to bring additional tax efficiencies to investors thanks to the availability of an “in kind redemption” that ultimately gives investors more control over the timing of tax obligations. Mutual funds, on the other hand, have a nasty tendency to stick remaining shareholders with tax liabilities incurred as a result of redemptions by others–a development that can obviously be undesirable [see Tax Loss Harvesting With ETFs: 6 Ideas To Lower Client Liabilities]. ETFs won’t allow investors to skip out on their taxes, but this product structure can deliver [...]

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Ten New Year’s Resolutions For ETF Investors

Michael Johnston — Mon, 02 Jan 2012 12:00:07 +0000

For most investors, 2011 was a frustrating year; after some strong early gains seemingly pointed to a continuation of the recovery that took root in 2010, the appearance of some major obstacles sent many major indexes back towards negative territory. The impressive late December rally closed the year on a high note, but there is no doubt room for improvement in 2012 as many attempt to return their portfolios to pre-recession valuations. The continued innovation and growth in the ETF industry in 2011 has given investors more tools in the toolkit than ever before, and it has made easier to maintain portfolios of all degrees of sophistication using only exchange-traded products. For those looking to take more control over their portfolios in the new year, we highlight ten tips that can enhance your ETF experience and help you get the most out of the robust lineup of exchange-traded products [sign [...]

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Where The ETF Money Is Flowing (The Answer Might Surprise You)

Daniela Pylypczak — Thu, 29 Dec 2011 12:00:57 +0000

As the calendars prepare to flip forward, it appears as if 2011 will go down as a record-breaking year for the ETF industry on the product development front. More than 300 new ETPs began trading this year, shattering the previous record set in 2010. But despite the record size of the ETF lineup, it appears as if growth has slowed quite a bit; cash inflows into ETFs have dropped off in 2011 compared to previous years according to data from the National Stock Exchange. Through the first 11 months of the year, total inflows into exchange-traded products stood at about $101.4 billion, meaning that massive December inflows would be needed to match the hauls for 2010 ($118.7 billion) and 2009 ($119.4). Barring a big surge in the final month of the year, 2011 could be the worst year for the ETF industry since 2006. Of course, the magnitude of the [...]

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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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Schwab Debuts Cheapest Ever Bond ETF (SCHZ)

Michael Johnston — Fri, 15 Jul 2011 11:00:35 +0000

Schwab was a latecomer to the ETF industry, launching its first products years after companies such as iShares and Vanguard had established themselves as pioneers in the space. But Chuck has been aggressive in playing catch-up, introducing commission-free ETF trading (a move many others have since replicated) and rock bottom expense ratios to attract cost conscious investors. Today the company rolled out the Schwab U.S. Aggregate Bond ETF (SCHZ), a new offering in the Total Bond Market ETFdb Category that will compete directly with existing funds from iShares, Vanguard, and State Street. The new ETF will seek to replicate the Barclays Capital U.S. Aggregate Bond Index, a broad-based benchmark that measures the performance of investment grade U.S. debt. The index underlying SCHZ includes Treasuries, mortgage-backed securities, investment grade corporate debt, and securities issued by agencies of the U.S. government. SCHZ is the fourth ETF seeking to replicate that bond index, [...]

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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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ETF Alternatives To The World’s Largest Mutual Funds

Michael Johnston — Mon, 06 Dec 2010 15:00:38 +0000

It may be premature to hit the print button for the death certificate of active management, but changes to the investing landscape over the last several years have forced a reassessment of the value proposition this strategy offers. Research suggesting that active managers fail to add value is, of course, nothing new. Over the last several decades, a number of academic studies have suggested that on the whole, active managers fail to consistently beat the market, and that the majority of mutual funds fail to beat their benchmark after costs are taken into consideration. This frustration with the costs of active management paved the way for the rise of indexing as an investment strategy, as many investors have preferred to own the market through a low cost vehicle rather than pay hefty fees to a manager to occasionally beat the market. ETFs have become tremendously popular among active traders implementing [...]

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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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Ten ETFs Every Advisor Should Know (But Most Have Never Heard Of): Part I

Michael Johnston — Thu, 16 Sep 2010 11:00:08 +0000

As the ETF industry has expanded at a breakneck pace in recent years, keeping track of all the products out there has become no easy task. There are now well more than 1,000 exchange-traded products included in the ETF Screener, and many of those have hit the market in the last two to three years. As ETFs have attracted billions of dollars in cash inflows, it has primarily been the well-established, plain vanilla products that have demonstrated the most impressive growth. Part of that is no doubt because many of the new funds launched in recent years have been targeted in on very specific corners of the investable universe or utilized advanced screening methodologies to select individual holdings, making them useless to investors with a long-term focus. But some of the more recent additions to the ETF lineup include products that should be considered as “building blocks” of long-term, buy-and-hold [...]

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ETF Database » LAG

Tax Efficiency Report Card

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Ten New Year’s Resolutions For ETF Investors

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Where The ETF Money Is Flowing (The Answer Might Surprise You)

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

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Schwab Debuts Cheapest Ever Bond ETF (SCHZ)

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Ten New Years’ Resolutions For ETF Investors

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Ten ETFs Every Advisor Should Know (But Most Have Never Heard Of): Part I

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