Active investing with passive ETFs, whether with a professional strategist or independently, provides investors with cost-savings and other benefits. ETFs generally have stated expense ratios that are a fraction of both active and index-tracking mutual funds. Because of their specific structure, ETFs generally have little in the way of the unreported trading costs which can hurt returns of all mutual fund investors. And finally, because ETFs usually track a passive index, investors often are better able to evaluate the performance of the active asset allocation decisions made by their manager. Finally, because of the specific create and redeem process of ETFs, investors infrequently need to deal with pesky capital gains distributions.
Active management is very much alive and thriving. The active management industry is evolving in ways that need to be understood. One thing is for sure, the ETF Strategist seems to be here to stay.
Herb Morgan is the Founder, CEO, and Chief Investment Officer at Efficient Market Advisors, a participant in the ETF Strategist Channel.
Disclaimer
This presentation has been prepared by Efficient Market Advisors, LLC, a division of Cantor Fitzgerald Investment Advisors, L.P. (collectively, “EMA”) for use in one-on-one meetings with highly-sophisticated investors, who are expected to make their own investment decisions. Nothing contained herein should be treated as investment advice or a recommendation to buy or sell any security. This article does not constitute tax advice and as such, investors should be advised to consult their own tax adviser regarding the tax consequences of their investment activities.