So God Made An ETF

February 07, 2013

A rendition of Paul Harvey's 'So God Made A Farmer' set to the tune of an ETF.

Dodge’s Ram Trucks aired one of the most talked-about Super Bowl commercials last week based on Paul Harvey’s classic “So God Made A Farmer” piece. It inspired me to write my own ETF version of this narrative given the 20th birthday of the ETF.

And on the ninth day God looked down on the investment landscape and said I need a way for mankind to invest more efficiently. So God made an ETF.

God said I need to provide an investment vehicle that prices instantly and minimizes tax burdens, all while efficiently holding diverse assets like stocks, bonds, commodities, currencies and more. So God made an ETF.

God said I need an investment vehicle that charges rock-bottom fees to investors, no matter how big or small that investor is. It must be liquid throughout the day and be accessed by both long- and short-investors. So God made an ETF.

God said I need an investment vehicle that can access the full spectrum of investments. It may need to own bars of gold and silver, futures contracts on corn and oil, stocks and bonds from far-away nations and perhaps even diamonds. So God made an ETF.

God said I need an investment vehicle simple enough for the average investor’s portfolio, but sophisticated enough for a professional’s skill. It needs to provide access to the simplest investments, while maintaining the flexibility to capture the most complex investment strategies. So God made an ETF.

God said I need an investment vehicle that lightens investor’s tax burdens, reveals underlying holdings, provides market access to all—but favors no one. The investment vehicle would need to track the most famous of indexes, yet still accommodate the most active of money managers. So God made an ETF.

God said I need an investment vehicle that is cost efficient, tax efficient, transparent, flexible, marginable, short-able and even in some cases have options contracts based on it. So God made an ETF.

God said I need an investment vehicle that would house investment strategies that could go long, short, flat or in a combination of directions. It had to be able to pay dividends, interest, distributions or even return of capital on a monthly, quarterly or yearly basis. So God made an ETF.

God knew mankind would embrace this efficient vehicle and that investing would be changed forever. So he instructed the new vehicle to be encouraged by its impact and respond confidently, “So God made an ETF.”


Christian Magoon, formerly the president of Claymore Securities before it was purchased by Guggenheim, now advises clients on ETF product development, marketing and distribution strategy through his firm Magoon Capital. His column for IndexUniverse appears twice a month.

 

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