hoover

Index ETFs Have the Edge Over Actively Managed CEFs

Neither index ETF's nor actively managed ETF's have been around long enough to compare generally with CEF's, which have been around for a long time. The only problem with managed funds (CEF's, OEF's or managed ETF's) is that the investor doesn't know what advantage if any he is getting from "management" fees. Managed funds churn a lot of stocks. They collect nice fees. A manager with today's banker's scruples, may run a "managed" fund by using a basic index fund approach, collecting kickbacks on stock trades due to useless churning, and collect a mangement fee for doing nothing. Using an index approach for the core investments in the "managed" fund, assures that the fund doesn't perform much worse than the general market -- which IS the typical performance of managed funds. The investor is simply paying fees for nothing in return -- but I am not suggesting all of them are run like that.