We know that, as a class, the hot-handers lose as well. The average mutual fund manager just doesn’t beat their benchmark over time. As a newbie to ETFs, you’re going to do great.
Your all-in costs are going to come way down. Most likely, your performance for the same basic asset allocation is going to be better—and as a funds-focused investor, you’re probably thinking in asset-class terms already. That’s the good news. The bad news is you’re going to need to learn how to trade ETFs. It’s not that hard, I promise.
The Index Fund Guy
The third class of investor may not even need ETFs. While that may sound like blasphemy coming from ETF.com, I’ve talked to plenty of you who are already in extremely low-cost stock, bond and alternatives funds from Schwab or Vanguard or any number of competitors, and honestly, you don’t have to move.
But there are still some reasons you might be considering it. ETFs give you access to all sorts of interesting things: commodities, smart beta, markets all over the world. ETFs give you flexibility in execution, and most likely, a bit of a tax deferral as well. If you’re willing to learn just a little bit on the trading side, many of you will slowly but surely migrate to ETFs over time.
Learning The Ropes
Part of what we do here is help new investors get up to speed on ETFs.
First, we have a lot of articles you can read on every aspect of how ETFs work in our ETF University section. If you’re not so much with the long reads, we’re producing videos for all the core concepts, the first few of which are up now, covering the basics of ETFs and the creation/redemption process at the heart of ETFs.
Second, of course, we’ve got the world’s best ETF screener to help you find the right ETF, individual fund reports for every ETF, and even tools to help you find out which ETFs own which stocks.
Third, we host ETF.com Live! each week, where you can play “stump the chump” with me about whatever ETF question is on your mind.
And last, we do webinars. Next week, Cinthia Murphy and I are doing an extra special one. It’s extra special because it’s just going to be pure education. We’ll walk through some of the basics, touch on creation/redemption and some of the key considerations for picking and trading ETFs. But more than anything, we’re going to have a conversation with the attendees—that would be you.
I hope you can join us. Registration is free, and we’re not even going to try to sell you anything.
Contact Dave Nadig at [email protected]