ETFs: The Most Important Development for Investors

ETFs: The Most Important Development for Investors
Excerpt:

Why the growing interest in ETFs? Besides diversification, ETFs provide lower costs, better portfolio transparency, and they are more tax efficient than most mutual funds. For active traders, the ability to trade during the day is the clincher. But those are the most obvious reasons - there's an even bigger reason I'm an ETF supporter. For most investors, indexing is the way to go. According to fund analyst Deborah Fuhr, 81.2 percent of active large-cap managers in 2011 didn't beat the S&P 500. Think about that. Mutual fund investors pay exorbitant fees - usually one to two percent a year, or more - for active management. And most do not outperform benchmark indexes.

Comment: I have several IRA's ... because of my tax and income situation I can no longer add new money to these. But they generate dividend income - cash - that can be used for investing. We use that dividend income to invest in the PEY ETF.