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ETFs vs. Funds

Posted By Barry Ritholtz On December 11, 2005 @ 8:08 am In Investing | Comments Disabled

I use ETFs alot, and find they can be vastly superior to Mutual Funds in many ways. The WSJ [1] did a nice  comparo between ETFs and Index Funds last month:

"According to Boston-based Financial Research Corp., ETFs now account for nearly one-third of all assets devoted to so-called passive investing (a term for investments like index funds), up from 9% in 2000. In less than three years, the total number of ETFs has jumped nearly 70%, to 185, while the number of index funds has remained relatively flat. ETFs have even started popping up in 401(k) plans.

A key driver in the popularity of ETFs is the failure by many mutual-fund managers to beat the market for extended periods of time, even as they collect big management fees. Instead, many advisers have turned to a strategy of lower-cost index funds, and increasingly, ETFs."

Also of interest: ETFs trade intraday, as opposed to merely being a "price on close" vehicle.  And, you can short an ETF without an uptick.


click for larger table

Etfs_110405 [2]

The Great Race: ETFs vs. Funds [1]
New Opportunities for Indexing Complicate Investors’ Choices; Picking the Right Market ‘Slice’
THE WALL STREET JOURNAL, November 5, 2005; Page B1

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URL to article: http://www.ritholtz.com/blog/2005/12/etfs-vs-funds/

URLs in this post:

[1] WSJ: http://online.wsj.com/article/SB113115471724589112.html

[2] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/etfs_110405.gif

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