Comments on: Are ETFs Bad for Investors?

By: Belmont Thornton

Belmont Thornton — Wed, 23 Jun 2010 09:05:18 +0000

I am a fan of ETF as they provide me with the option of a lower expense ratio than those of the average mutual fund.

By: Mark

Mark — Tue, 22 Jun 2010 19:04:32 +0000

I am a big fan of ETF’s. I feel that they are a lot more convenient for investors because they do not require a minimum investment amount and list their prices daily. Only the best mutual funds are worth the additional expenses.

By: Monevator

Monevator — Tue, 22 Jun 2010 09:30:05 +0000

There do seem to be a lot of ‘exotic’ ETFs listed in the US, with rather bizarre holdings and higher total expenses. I think that’s part of the complaint, too — that what started as simple Total Market funds have become ways to bet on sectors or themes.

Although perhaps that comes down to a preconception of what an ETF should be. Short, leveraged ETFs are dynamite in most hands, but again a useful tool for those who know (or believe they know) what they’re doing.

Perhaps as ever the problem is one of education, and human biases.

Show someone a more complicated investment, and usually they’ll choose it over a simpler one. You don’t buy a simple Nokia phone or a second-hand PC, do you? People have a lot of trouble leaving that mental bias behind when investing.

By: Barb Friedberg

Barb Friedberg — Mon, 21 Jun 2010 23:05:03 +0000

I think competition is usually great. of course, commission-free is great! As an infrequent trader, and a rather passive investor (and Professional Portfolio Manager), I love etfs. The lower the fees, the better….. and commissions today are so cheap, they almost don’t matter- especially when making a large investment. Thanks for an awesome site. Best regards, Barb

By: RJ Weiss

RJ Weiss — Mon, 21 Jun 2010 13:38:16 +0000

Originally, I wasn’t a huge fan of ETF’s. The biggest reason was because most index investors don’t invest all at once. They dollar cost average little by little, into the market each month. Therefore, why pay the $10 a month to a brokerage house when you can invest through the mutual fund company for free.

As I see more companies coming out with commission free investments, ETF’s are beginning to gain more and more popularity. I see no problem in that. They can be a cheaper way, for many people to invest.