View From 30,000 Feet: ETFs Are the Future

When I told my editor I was preparing a two-week trip to Africa, and planned to do some writing while traveling, he suggested I knock out a piece during the 21-hour flight.  

He thought it might make for a solid perspective piece: a financial advisor with 30 years of experience with exchange-traded funds, 30,000 feet above a continent few of us get to visit, pondering a world that, thanks to technology and human imagination, gets smaller all the time. 

For my wife and me, this is our first self-admitted “bucket list” trip in a long time, visiting her brother and his family in Kigali, Rwanda, part of eight family members on a safari to “The Great Migration.” 

Writing six miles above Northern Africa, 18 hours from South Florida, a few frontline thoughts come to mind when I compare this trip to my three-decade tour of the ETF industry, as investment advisor, fund manager, researcher, consultant and journalist. 

Past, Present and Future 

I’ve seen the financial industry from a range of angles since stepping out of college and into the World Trade Center 37 years ago, and I can say this with certainty: ETFs are the past, present and future of portfolio management. 

Their ability to split the market into a jigsaw puzzle, putting an endless supply of strategies, tilts and themes in the hands of professional and self-directed investors, takes the mutual fund— which will celebrate its 100-year anniversary next year—and adds the critical dimensions of transparency, liquidity and tax efficiency.  

Don’t take my word for it. Look at how many of the big mutual fund providers like Vanguard Group and Fidelity Investments have pointed investors toward ETFs, and how so many more continue to follow.  

Simultaneously, new innovators like Global X, Simplify and so many others are putting tools into our hands that give us a choice about how we want to execute our investment philosophy, process, strategy, and buy and sell decisions.  

We can continue to manage our money the more time-intensive way, with direct transactions in stocks, bonds and options. Or, we can pay a bit more in expense ratio—a cost more than offset by a host of structural ETF advantages—to help advisory clients and ourselves make portfolio management make more sense. 

I’m old enough to remember when the common approach to investing was to have your broker pick 20 stocks of blue chip business, and hold them until you retired. And while that is still a viable approach for some, the fact is that markets have changed, and we need to change with them.  

A Bigger Boat 

Many investors, myself included, decided a long time ago that along the lines of that classic quote from “Jaws” (“You’re gonna need a bigger boat”), my colleagues at etf.com unite around the fact that in 2023 and beyond, we need a bigger investing toolbox. There’s a three-letter word for that: ETF. 

Don’t just be part of the ETF evolution: Immerse yourself in it. Your portfolio will thank you. 

It certainly struck me in the last 24 hours that there’s a wide world out there, and it includes people from hundreds of nations, each country and native of those countries having their own story.  

As investors, we can embrace ETFs as a primary investment research and application mechanism to construct better portfolios. Or, we can blend them in with other, likely existing investment methods.  

Either way, my message is this: Take advantage of what already exists, and the continuous innovation in the ETF arena. Do not stop at, “Yeah I know a few ETFs; I’m good.”  

The ETF shuttle has left the terminal. Fortunately, regular service is scheduled, so be sure to get a good seat.  
They’re about to serve snacks up here over Africa. Gotta go.