Even if you haven’t heard these vicious (and mildly exaggerated) tales, at some point you will meet some windbag who wants to talk for hours about the horrors and tragedies of ETFs. Ronald DeLegge of ETF Guide shares some of his favorite ETF myths:
- ETFs encourage investors to become hyperactive traders.
Hmm, what other trusted investment vehicle offers intraday liquidity? Oh, that’s right: stocks. If this is true, then apparently all stock investors are bouncing off the walls.
- ETFs are a bad choice because of the growing number of poor ETF investment options.
Currently, there are more than 20,000 mutual funds and 9,000 hedge funds. Does that mean those options are a bad choice too? A little more than 500 ETFs exist now. While that’s still a lot, and those numbers are sure to multiply, it’s comparatively much more manageable for the time being.
- The ETF industry markets and sells ETFs the wrong way; therefore, ETFs are bad.
This strategy is excellent for people who like to judge others based on their parents. For the rest of us, a better idea is to evaluate ETFs on what securities are in them and what indexes they track.
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.