ETF Chosen Over Mutual Fund
April 27th at 10:03am by Tom Lydon
One fund manager chose to launch an exchange traded fund (ETF) over a mutual fund. According to Aaron Siegal for InvestmentNews, James Huguet’s large-cap investment approach was the basis for this month’s launch of Claymore/Great Companies Large-Cap Growth Index (XGC). Huguet decided to pass on creating a mutual fund as it would take at least three years to get a rating from Morningstar, whereas the 10-year backtesting could give instant credibility. He thinks fund managers are not embracing ETFs because they fear the ETF will cannibalize their funds.
Whatever the reasons, there is no doubt of the popularity and growth of ETFs. As with any investment decision, an investor must do homework to know what they are buying, review their criteria for adding a holding and make sure they have an exit strategy.
