ETFs Under The Hood: Financial Advisors' Daily Digest

by: SA Gil Weinreich

Summary

Evan Powers finds big differences among ETFs with nearly identical descriptions.

Kevin Wilson sees 10-year Treasury yields heading to 50 bps and offers thoughts on what trades to make in anticipation thereof.

Columbia Threadneedle Investments' chief investment officer argues reliability of retirement income is a worthier goal than its maximization.

I was an early ETF enthusiast, going back to their infancy when it was easy to have knowledge of the whole field and clearly characterize their differences. I lost some of my enthusiasm as their numbers multiplied and I sat across the table at ETF conferences (almost as numerous as ETFs) from an array of product vendors each trying to tell me how their mousetraps were better than the rest.

Now that there are more than 4,000 ETFs, understanding their differences requires a quite granular level of detail and has become rather laborious. Fortunately, Evan Powers guides us through the process, its perils and pitfalls, in an article on today's SA. I quote:

"Comparing two selected Energy sector ETFs with almost identical names (XOP and IEO), we can see a great demonstration of how composition can differ greatly, even among funds whose titles are essentially indistinguishable."

You can click here to read the rest of the article ("Are Your ETFs Lying To You?") and see for yourself the value of looking under the hood.

Meanwhile, here are today's news and views for advisors: