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Five Critical Questions To Ask When Investing In ETFs

by on February 11, 2010 | Updated July 7, 2014

ETFs surged in popularity in the late 2000s in part because of the numerous advantages they offer over traditional actively-managed mutual funds: lower costs, potential tax efficiencies, intraday trading, and enhanced transparency. But ETFs aren’t without potential drawbacks of their own. Although most funds appear relatively simple on the surface, there are some rather complex nuances as well. Below, we highlight five important questions for investors looking to avoid potential pitfalls and maximize efficiency of ETF portfolios (for more tips on ETF investing, sign up for our free ETF newsletter). [click to continue…]

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Four Ways To Slash Your ETF Expenses

by on December 10, 2009 | Updated June 30, 2014

The reasons for the incredible rise of the ETF industry are numerous. Intra-day trading, enhanced transparency, and efficient tax features are all features that investors, individual and institutional alike, have embraced in record numbers. But perhaps the main reason why ETFs have attracted hundreds of billions of dollars in assets in recent years is the competitive cost structure they offer relative to traditional actively-managed mutual funds. Investors frustrated with the inability of most active managers to consistently beat their benchmark have been fleeing mutual funds in record numbers, embracing indexing as a strategy and ETFs as a preferred investment vehicle.

But investing in ETFs doesn’t necessarily mean that investment expenses are kept to a minimum. Expense ratios among ETFs can vary significantly, and several of the most popular ETFs charge more than twice the fees of otherwise similar products. Reducing a portfolio’s weighted-average expense is a relatively easy task that can have a big impact on the bottom line. We have identified four ETFs found in most investor portfolios that can be replaced by low-cost competition:

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Charles Schwab, one of the country’s largest asset managers with more than $200 billion in assets under management, has made quite an entrance into the ETF arena. The San Francisco-based company announced the launch of its first eight exchange-traded funds, including four that will begin trading on Tuesday. Each of the exchange-traded products from Schwab […]

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Charles Schwab, one of the world’s best known and largest asset management firms, recently took another step towards finally breaking into the rapidly-expanding ETF industry. Earlier this month, Schwab filed paperwork with the SEC to launch nine ETFs. The proposed funds will have the benefit of the Schwab name (and the tremendous resources that come […]

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As the ETF industry has exploded on to the scene in recent years, sponsors have aggressively launched funds in an attempt to gain market share. While many of these new ETFs have attracted sufficient investor funds to justify continued operation, some have failed to garner a level of investment necessary to support an active, liquid market […]

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How Beta Got Her Groove Back

by on May 7, 2009 | Updated May 14, 2009

It’s been almost 17 years since two economists at the University of Chicago, Eugene Fama and Kenneth French, published an attack on the stock price measure of risk known as “beta,” prompting “Beta is Dead” headlines from numerous financial publications. While these obituaries may have been a bit premature (beta is still widely taught in university […]

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Why ETF Really Stands for “Efficient Tax Features”

by on April 30, 2009 | Updated May 14, 2009

When touting the benefits of ETFs relative to actively managed mutual funds and even index mutual funds, many investors (myself included) often lead with the lower cost structures and improved flexibility and transparency of ETFs. While the tax efficiency of ETFs relative to mutual funds is often mentioned as a secondary advantage, this benefit is […]

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