Comments on: ETFs vs. Mutual Funds

By: HS

HS — Tue, 20 Apr 2010 01:00:44 +0000

Just to continue CtR’s point, if someone was to DCA (Dollar Cost Average), it could be very expensive if they were investing into ETFs. Thats because ETFs are purchased from brokerage. Even if you’re at a discount or low-cost brokerage, you’re still paying per transaction. Even if you’re paying $10/transaction (most brokerages in Canada are charging a lot more then that), and you’re doing a monthly contribution, then thats $120/year, which could negate (and then some) the difference between the fees between Mutual Funds and ETFs.

Also keep note that when you conduct a buy/sell order, you have to pay ’spread’ – the price at which you can buy is slightly higher then the price at which you can sell. Whoever is executing the trade in the stock market for you is pocketing the difference.

Another point, is that ETFs are not professionally managed, and you’re not getting professional advice from an advisor or mutual fund manager. This means that you have to do all your own homework and spend the time and energy to look through vast selection of ETFs available. Most people don’t have this time of time, patience, or understanding capability, so investing in an ETF ‘might’ not be for them.

Every strategy has its pros and cons, and both should be analysed before making ANY financial decision.

By: Roth Vs Traditional IRA | Finance Blog

Roth Vs Traditional IRA | Finance Blog — Wed, 06 Jan 2010 13:06:31 +0000

[...] beginning investors with little to invest at first), Tradeking (for investors who prefer buying ETFs over mutual funds), and Zecco (another discount brokerage with inexpensive [...]

By: Roth Vs Traditional IRA - Amateur Asset Allocator

Roth Vs Traditional IRA - Amateur Asset Allocator — Sun, 03 Jan 2010 17:51:49 +0000

[...] beginning investors with little to invest at first), Tradeking (for investors who prefer buying ETFs over mutual funds), and Zecco (another discount brokerage with inexpensive [...]

By: Mr. Cheap

Mr. Cheap — Thu, 06 Dec 2007 20:17:57 +0000

Good point CtR… thanks!

By: Cross the River

Cross the River — Thu, 06 Dec 2007 19:04:54 +0000

One must remember that the rate of return should not be the only element considered when comparing ETFs to mutul funds. You also have to consider the commission for the purchuse of the ETFs. In order to minimize the overall cost, one should keep etgfs for the longest period of time possible.

PS: great blog!

By: Saturday Morning Update

Saturday Morning Update — Sat, 03 Nov 2007 12:52:04 +0000

[...] week Millionaire Mommy Next Door hosted the Carnival of Personal Finance and included the post ETFs vs Mutual Funds. She added a cool voting feature so I suggest going and voting for my favourite post on the [...]

By: This and That

This and That — Fri, 26 Oct 2007 03:21:01 +0000

[...] of 5 mutual funds managed to beat the iShares CDN Composite Index ETF. Investing Intelligently and Four Pillars blogged about the findings in Rob’s [...]

By: Four Pillars

Four Pillars — Tue, 23 Oct 2007 02:30:41 +0000

MG – that’s an excellent point as well which I conveniently didn’t mention in the post.

I personally have diversified out of Canada for this very reason. It hasn’t paid off over the last year (which is when I did it) but I know it will pay off in the long run.

Mike

By: moneygardener

moneygardener — Tue, 23 Oct 2007 01:24:13 +0000

Another point is that XIC is much too heavily weighted in resources/materials. This is inherently riskier and more cyclical than a mutual fund that has a more balanced asset allocation. The Canadian market can be a dangerous one to index IMO.

By: FourPillars

FourPillars — Mon, 22 Oct 2007 20:07:06 +0000

MG – I would agree that if there is a big correction – since most mutual funds have at least a small cash holding that should cushion the fall a bit.

I guess the relevant comparison is one that is long term and covers all different kinds of market conditions.

Mike