ETF Trends
ETF Trends

Exchange traded funds are one of the hot topics of discussion at the 23rd annual Morningstar Investors Conference in Chicago as investors, managers and advisers converge to talk the markets.

Now, one popular mutual-fund columnist reporting from Chicago says traditional funds have already lost the battle to ETFs, which offer lower fees, daily trading and other advantages.

“It’s a bit like calling an election with just a few percent of the precincts reporting their results, and it’s certainly not going to surprise people who have used exchange-traded funds for several years now, but in the battle between traditional mutual funds and ETFs, the upstart is winning and the only thing left is to negotiate the terms of the surrender,” says Chuck Jaffe for MarketWatch.

Other points:

  • The biggest difference between ETFs and mutual funds is that a mutual fund trades once at the end of the day, and an ETF can trade like a stock, throughout the day. Essentially, both funds are the same, a basket of stocks that bring diversification and some management.
  • ETFs do have cost and tax benefits, such as their lower expense ratios. The advent of the free trades within a particular brokerage account has also helped with cost management.
  • ETFs bring transparency to the table, so investors know what exactly they own, and at any time. Mutual funds disclose once at the end of the day.

Morningstar’s conference kicked off with a speech from Bill Gross of Pimco, which is making a push in the bond ETF business. It closes with a speech on Friday from Larry Fink, chief executive of BlackRock, which owns the iShares ETFs. [Mutual Fund Providers Want in on Active ETFs.]

Tisha Guerrero contributed to this article.

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.