Are ETFs Gimmicky?
February 26th at 1:02pm by Tom Lydon
Jack Bogle, of The Vanguard Group, accused the exchange traded fund (ETF) industry of producing gimmicky funds with narrow sector focus, high intermediation costs and excessive turnover. Mark Armbruster wrote for The Wall Street Journal that the very transgressions Mr.Bogle accuses the ETF industry of are also present in the mutual fund world. He states index funds that short popular benchmarks exemplify a gimmicky strategy that was born in the index mutual fund world.
Jeffery L. Feldman, HealthShares founder, says," Empirically, we can look back at fund investing over the past 30 years and realize it would have been impossible to participate in all areas of the economy through a single portfolio." Likewise, Lee Kranefuss, CEO of iShares, argues ETFs appeal to a number of investors because of their flexibility, diversification and transparency all the while not subsidizing the costs of active traders in ETFs.
