Are exchange traded funds (ETFs) taking the place of open-ended index mutual funds? The answer is "no," at least for now. A recent study conducted by McCombs School of Business students at the University of Texas came to this conclusion using hard data.
The perspective is from the individual or small trader’s investment needs, and most of the study was conducted using open-ended funds research, reports Heather Bell for Index Universe.
The main point that can be extracted from the research? ETFs are attractive to a great many people, but OEFs are are more suited to certain groups of a specific investor, especially a risk-averse small investor.
We feel ETFs have a home in any portfolio, as they offer instant diversification. You can also easily tailor your portfolio to meet your strategy and risk-aversion levels. But it’s true that mutual funds will likely always be attractive to some investors, regardless of how great ETFs may be.
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.