Are you one of the many investors who each day are discovering exchange traded funds (ETFs)? You might know about their advantages and how they work, but there may still be a lot you don’t know about them.
Katy Marquardt for U.S. News & World Report lists 10 things investors need to know about them. We’ve highlighted the most interesting ones:
- ETFs aren’t new. You may have just heard about them, but in the United States, the first one launched in 1993. Known as the SPDRs (ticker symbol SPY and pronounced "spiders"), it tracks the S&P 500. Today, there are more than 600 ETFs.
- Despite how quickly they’re growing, ETFs are still a relatively small portion of investors’ dollars. At the end of March, there were $571 billion in assets in ETFs. Compare that with roughly $12 trillion in mutual funds. But it also took mutual funds 45 years to reach $600 billion in assets.
- Fees are low, but not always. There are some ETFs that charge higher fees, but as competition increases, this issue may resolve itself. And even so, the fee in a particular ETF might be higher than the average, but it also still may be cheaper than a mutual fund or individual stock-picking.
- ETFs want your retirement money. There’s a big push to start getting ETFs into 401(k) plans, but what’s taking so long? Investors need to start taking charge and talk to their human resources department to find out why ETFs aren’t available to them. The ETF industry is watching this issue closely, and you haven’t heard the last of it.
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.