There are reasons for investors to cheer ETFs:
"So, is the smart money with ETFs? This month we have done our best — in the Age of the ETF series — to lay out the pros and cons of the most successful investment innovation of our time. Being journalists, and with a need to act as watchdogs, we have tended to err on the side of the negative and ask, “What could possibly go wrong?” There are no apologies for that.
But let us take a look at what ETFs do offer. They provide all the benefits of passive management. They allow much more trading. And that greater trading has created jobs for a whole ecosystem around them: brokers who sell them to the public, stock exchanges, and the market-makers and brokers who ensure they stay in line with their benchmark.
That trading is excessive. In aggregate, those who trade heavily give themselves a worse deal. As shown by Jack Bogle, the Vanguard founder and a lasting sceptic of ETFs, the average investor in ETFs does worse than the fund itself. This is because the trading, usually mistimed, generally succeeds only in sparking value."
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