ETF Trends
ETF Trends

Updated Version
In today’s world, how could anyone afford not to invest in exchange traded funds (ETFs)? Even if you look at one of the most respected and best performing mutual funds, Fidelity Magellan (FMAGX), the S&P 500 SPDR (SPY) consistently outdoes it, as Gary Gordon of ETF Experts comments. Gordon chooses Magellan for comparison because of its well-known status thanks to former investment manager superhero, Peter Lynch.

With numbers like these, how can investment advisers knock ETFs? Even if you look at a different, popular mutual fund, such as Oakmark Select (OAKLX), the evidence in support of ETFs is still overwhelmingly strong.

A comment from a reader points out dividends were paid in December for FMAGX and OAKLX.  When a fund pays a dividend, the net asset value falls on that day by an amount approximately equal to the dividend.  The charts previously posted did not properly illustrate the dividends.

In looking at the 1-,3-, and 5-year total returns for the mutual funds versus the ETF, SPY still outperforms.  Below are the numbers and a chart from Morningstar comparing the three funds.

FMAGX:
1-yr: 18.2%
3-yr: 11.0%
5-yr: 10.0%
OAKLX:
1-yr: 19.3%
3-yr: 11.7%
5-yr: 11.7%
SPY:
1-yr: 21.5%
3-yr: 12.5%
5-yr: 11.8%

Spycompare

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.