When exchange traded funds first hit the market, traditional stock traders had a hard time adopting the new investment idea, but now most don’t even hesitate to use ETFs if they want to take a broad market position.
“At first, investors were highly skeptical of ETFs,” Chuck Simko, a portfolio manager at MainStreet Advisors, said in a Wall Street Journal article. “Early on, people had problems getting their heads around ETFs, Now, they don’t even think twice about using them. I don’t spend nearly as much time these days educating clients about how ETFs are different from mutual funds.”
For instance, ETFs are low cost, tax efficient and transparent investment vehicles.
“We’ve found that using ETFs as part of a passive portfolio management strategy provides a very effective shield against the deceptive business practices so prevalent in the retail funds industry.” Ric Edelmanan of Edelman Financial Services said.
Ron Vinder, an advisor at UBS Financial Service, also remembers how other advisors and managers tried to dissuade him from picking up ETFs. The advisors argued that ETFs would be a net liability because investors would just do it themselves.