The biggest winner coming out of the financial crisis was “transparency“. After all the scandals and devastating losses that occurred during that time, investors became disenchanted with the lack of transparency in their investments. In some investment structures (that still exist today), investors may not know how their money is being allocated for months, sometimes even quarters. And even then, investors sometimes don’t know exactly what they are invested in. Transparency as it relates to exchange-traded funds (ETFs) does not only mean transparency of portfolio holdings. It also applies to transparency of information.
Now that December is upon us, many investors are starting to take a serious look at 2014. With the S&P 500 Index up nearly 30% year-to-date1, investors are stepping back, putting 2013 in perspective and thinking about the year ahead. Do I rebalance back to my target weights? Do I change my asset allocation model? As investors spend the month of December deciding how to approach 2014, it is important to remember all the benefits that ETFs offer beyond liquidity, transparency, tax efficiency, lower fees2 that will help guide investors to better decisions. Investors of all sizes have access to the same valuable information to help them with the due diligence and decision-making process.
Here are a few to think about:
Volume Statistics: It is always helpful to see volume numbers in ETFs. They allow investors to more accurately monitor ETFs and see potential trends emerging. Investors can see if large block trades were executed and if shares outstanding increase or decrease in subsequent days. This valuable information helps investors of all sizes in the due diligence process.