Quote:
Originally Posted by Cowboy89
I can appreciate where this is coming from. However I counter that in defence of ETFs you have to offer up something that proves that the 'star managers' tend to beat the index enough to justify their fees over the long term. Not only that you will have to also prove that the star managers of tomorrow are easily identified today in a way that makes it actionable.
Also your criticism of ETFs seems to be parcelled in with the belief that the person using them would do so inefficiently (Not really an apples vs apples comparison, because mismanagement would crater returns in any case). Should someone understand proper asset allocation and use ETFs in conjuntion with stocks, bonds, et al to build and rebalance their portfolio according to their needs and risk tolerance over time, then it should just come down to an analysis of returns between fund products and ETFs.
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That does appear to be the case, but the waters are murkier now than they were a few years ago:
https://secure.globeadvisor.com/serv...YSIDE17ART1857
I use ETFs when the shoe fits (and many professional managers in various areas do as well). There are some concerning areas being brought up here though. The transparency is hard to manage and many ETFs use derivatives a fair amount. Tax-wise there can be large consequences as well and while holding them in an RRSP doesn't cause concern in this area the same cannot be said for non-registered holdings.