But to fight ETFs is a losing battle. They are indexing, they’re superior to mutual funds in every way and investors are realizing it. ETFs have made it easier for all types of market participants to grab their desired exposure to the market, they’re cheaper than mutual funds, they provide investors with hundreds of choices and they’ve made it easier for them to do the necessary research, thanks to transparency. Investors are simply better served in a way they haven’t been now that ETFs are in existence.
If you want to fight for investors, look at 401(k) plans instead. There’s far greater damage being done to Americans that way than any ETF could inflict.
ETFs offer great diversification, tax efficiency, low cost, transparency and exposure to sectors and areas that are otherwise difficult to gain exposure to. They key is to stay educated, have both an exit and entering strategy and don’t let emotion play a role in your investment decisions. Additionally, by utilizing a trend following strategy, you should be able to cut down on frequent trading and prevent transaction costs from eating away at your profits.
For more stories on 401(k) plans, visit our 401(k) category.
Kevin Grewal contributed to this article.