Cory Banks for Index Universe reports that the concern comes down to fees. Shareholders of a mutual fund pay fees for their slice of the pie: transaction costs, advisory fees, marketing and distribution expenses—all on top of the fees paid to the fund manager herself. The fees are one of the several reasons why many advisors are moving to lower-cost exchange-traded funds.
Some analysts conclude that fund managers are buying ETFs instead of futures,where margins would climb. ETFs give both managers and investors fast, and cost effective exposure to the market. [Actively Managed ETF Education is Key]
The use of ETFs in mutual funds is a good thing for the industry. Managers get the benefits of ETFs,which are passed down to shareholders. In turn, ETFs will continue to gain more assets under management and positive feedback.
Tisha Guerrero contirbuted to this article.