So, today, mutual fund providers are deciding to get in on the game, and have decided to use ETFs to access targeted areas of the market at a better price. Rather than have a number analysts research every nook of the market, providers are employing a small sample of technical analysts to research a small pool of ETFs, reports Paul Katzeff for Investor’s Business Daily. The strategy of a mutual fund remains the same, the mutual fund holds an ETF to make the process seamless, to simplify it.
Smaller mutual funds use this technique the most because it can cut costs and makes use of limited resources. As of October 16, more than 1,000 mutual funds held ETFs. The most common vehicles that ETFs show up in are the target-date and life-cycle funds. [Stock Mutual Fund Exodus Continues as ETFs See Inflows]
Some of the larger firms that are using this strategy include JP Morgan, Legg Mason, and John Hancock.
Tisha Guerrero contributed to this article.