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What are your thoughts on ETF's?


Five Wood

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I've always invested in individual stocks and use options on those stocks to generate additional income. In recent times, I have shifted my portfolio to include more and more ETF's. I think it's quite possible that I will shift completely to ETF's. The positive attributes seem to far outweigh the negative.

 

Edit: I should explain that when I say ETF, I'm not referring to the leveraged funds. The ones I use are the SPDR sector funds such as XLY, XLP, XLI, etc.

 

With ETF's you have no fear of bankruptcy in the underlying instrument. The options premiums are less because of the lower volatility, but I have to keep far less cash in reserve to rescue the positions should it be needed. As a result I can invest more in the underlying position .

 

We have some savvy investors here, so I would like to hear your thoughts on investing strictly in ETF's.

 

Thanks

Jim

Jim
SKP: 99693
If you think you can, or you think you can't. . . you are probably right (Henry Ford)
2014 Dodge 4WD Dually
1998 Carriage LS-341

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  • 2 weeks later...

We covered that topic at one of our financial adviser's learning center meetings. Even though they don't sell ETF's their lecture showed how ETF's were superior to mutual funds in terms of fees.

ETF's are part of a diversified plan - and so the adviser isn't adverse to them. Putting ALL of your eggs in one basket may not be the best advice though.

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~Rich

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A problem I see with mutual funds is you have to wait until the end of the year to find out what the distributions will be where as with ETF's you can track price and divs (quarterly) to decide if its time to buy or sell.

Ray & Deb - Shelbi the Aussie & Lexington the cat
2004 Volvo 630 500HP ISX "Bertha D" - 10 Speed-MaxBrake -ET hitch.SOLD
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Fulltiming since '07 - stopped 2016

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All could be valid points but...

Depending on the mutual fund there could be trading fees with you broker

Some brokers don't charge trading fees on some ETF's

Liquidity is usually is/could only be a problem with "exotic" ETF's

In a retirement account ROI, ROC, cap gains, divs probably don't matter

could go on but bottom line like everything there are pro's and con's so "it depends".

Ray & Deb - Shelbi the Aussie & Lexington the cat
2004 Volvo 630 500HP ISX "Bertha D" - 10 Speed-MaxBrake -ET hitch.SOLD
2009 Designer 35RLSA SOLD
Fulltiming since '07 - stopped 2016

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