Quote Of The Week: When An Exchange Traded Fund May Not Be The Right Choice

“Ninety-nine percent of ETFs out there are garbage—marketing hype. They are products meant to be sold, not bought. Maybe a handful or two are worth considering. The rest are hype.”

Larry Swedroe, Director of Research for Buckingham Strategic Wealth, with over $13.7 billion in assets under management (AUM), in an interview with Wealth Management magazine, January 10, 2019

The Takeaway: ETFs (Exchange Traded Funds) can be great additions to your portfolio thanks to their tax efficiency and typical low cost ( if you are not familiar with ETFs, think of them as mutual funds in a new and often improved wrapper).

But as Swedroe points out, not every ETF is a good deal from an investment or cost-savings perspective. Many are packaged with a catchy name or theme, like companies likely to benefit from tax reform, or distillers of whiskey, but they really don’t deserve your investment dollars.

What’s important is what’s inside the box, not how it’s wrapped on the outside, or how clever the ticker is. When you invest, focus on the investments, not the marketing hype. Stick with mutual funds or ETFs with a clear investment premise, low expenses, and proven results.

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!


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