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no_joke · 01-01-2007, 09:54 PM

I've been investing in mutual funds for just about 2 years now. Not really an "active" trader really- I do monitor how my funds are doing a few times a month and keep a spreadsheet. I heard about exchange traded funds (ETFs) and did some comparisons to my mutual funds over the last three years (since inception of the ETF).

For instance, I have an international equity mutual fund and comparing this with a similar ETF, the ETF has posted a higher 3yr annualized gain. I also noticed that the graphs for the mutual fund and ETF followed the same "trends" (rises and falls) as well. I also did some more comparisons and I could go on but in short, the ETFs seem to post better gains. I know it's a not as easy as that because it depends on what holdings are in each and it was a very short time frame for comparison. However fundamentally, ETFs have much lower MERs

than mutual funds and actively managed funds most often do not outperform the market whereas ETFs basically follow the market. So in my position it's hard to see why I shouldn't make the switch to ETFs. I'd say I am a conservative investor with 3-5 yr time frame.

Any thoughts?

01-01-2007, 09:54 PM	#1 (permalink)
no_joke Upright	Switching from mutual funds to ETFs I've been investing in mutual funds for just about 2 years now. Not really an "active" trader really- I do monitor how my funds are doing a few times a month and keep a spreadsheet. I heard about exchange traded funds (ETFs) and did some comparisons to my mutual funds over the last three years (since inception of the ETF). For instance, I have an international equity mutual fund and comparing this with a similar ETF, the ETF has posted a higher 3yr annualized gain. I also noticed that the graphs for the mutual fund and ETF followed the same "trends" (rises and falls) as well. I also did some more comparisons and I could go on but in short, the ETFs seem to post better gains. I know it's a not as easy as that because it depends on what holdings are in each and it was a very short time frame for comparison. However fundamentally, ETFs have much lower MERs than mutual funds and actively managed funds most often do not outperform the market whereas ETFs basically follow the market. So in my position it's hard to see why I shouldn't make the switch to ETFs. I'd say I am a conservative investor with 3-5 yr time frame. Any thoughts?