Wall Street seems to have gotten its fingerprints all over Donald Trump’s plans to Repeal Dodd-Frank, and just eliminate the Department of Labor’s “Fiduciary Rule” outright. “Dodd” was passed to rein-in the Banks following The Great Recession (4Q07 to 1Q09). The Fiduciary Rule, on the other hand, applies specifically to Qualified Retirement Plans (IRAs, 401(k)s, 403(b)s, etc), and it requires financial professionals to place the clients’ interests ahead of the firm’s, and their own. Shouldn’t that rule apply to all securities accounts?
Back in November, I wrote about giving our combined personal investment portfolio its first major overhaul ever, because: I have on-going concerns about what havoc Donald Trump might wreck on our Economy; and I wish to simplify our portfolio, in the event that my wife and daughter might have to take over managing it at some point. And given Trump’s continued irrational behavior, these concerns still seem as relevant as ever.
Yale Economics Professor Joseph Shiller won the Nobel Prize, in 2013, for his empirical analysis of asset prices. Shiller concluded that the market is inefficient, and he has suggested that passive index funds can do just as well as actively-managed ones, but without the higher management fees. Warren Buffett, in his Letter to Berkshire Hathaway Shareholders, concurred, suggesting that an S & P 500 index fund, possibly with other stock exchange-traded funds, plus individual bonds or a bond ETF, would perform better in the absence of the management fees. John Boggle, founder of Vanguard Funds, agrees.
In May of 2012, I wrote a post, comparing mutual funds and ETFs. It provided a brief, but general comparison between actively-traded mutual funds and ETFs. Given what is happening now; however, I believe that the Advantage has certainly shifted in favor of ETFs.
Here are some sources for learning more about ETFs:
The CNBC (financial channel) web site provides news, plus market statistics. On the “Markets” drop-down box, the various global markets can be checked in real-time. At the bottom of the drop-down, go to “ETFs” for a list, prices, performance, and trading volume of the most popular ETFs, with the Sector SPDRs just below them.
Then go to the State Street web page for SPY, and that company also distributes the Sector SPDRs. On the SPY page, a Fact Sheet can be viewed, as well as other literature.
On the Sector SPDR page, there are Fact Sheets for each of the sector ETFs, performance and a list of all of the stocks, within each of the sectors of the S & P 500. There also is a Sector Tracker, which provides historical performance, for each sector, across various time-frames.
iShares provides a range of mostly overseas ETF, either globally, by region and for many individual countries. Some of the iShares ETFs that I used, when I wanted to put money into various overseas markets, are as follows: EFA for the EAFE (Europe, Australia and there Far East) Index of industrialized markets, EEM, for Diversified Emerging Markets, or EPP for Asia-Pacific, excluding Japan), among others.
Lastly, check the Stock-Encyclopedia ETF Guide to research any ETF, to include Fast Sheet and other research material,
There are hundreds of ETFs on the market. If your advisor suggests one, be sure to have him/her explain why that (those) particular one(s) would be suitable for your needs. I would suggest shying away from ETFs that invest in commodities and foreign exchange, because those markets are more oriented toward institutional investors. Similarly, be aware that ETFs that double or triple the upside of an index, will similarly increase the risk on the downside.