New frontier of ETFs

[pb4uski]

Vanguard is expanding its ETF lineup with the introduction of the AlphaBet series of ETFs, an innovation in the ever-growing ETF space. Together these 26 portfolios, based on the initial letter of the ticker symbol of each company in the Standard & Poor’s 500 Index, provide investors with U.S. equity market beta building blocks by covering the index from A to Z.

Because of the transparent, rules-based nature of the portfolios—constructed with equal-weighted components of all current securities in the S&P 500 whose tickers begin with a particular letter of the alphabet and rebalanced monthly—we have been able to model the historical performance of these portfolios over time to assist investors in understanding how these portfolios may perform.

Introducing Vanguard’s new AlphaBet ETFs | Vanguard Blog for Advisors

It would have been better if dated April 1.

 

[audreyh1]

I have to say Vanguard is very creative in the ETF space!!!

Are you sure this is not satire? Hmmm.........

 

[Gotadimple]

I have to say Vanguard is very creative in the ETF space!!!

Are you sure this is not satire?

Schwab just came out with something similar. Give it 10 years and check the returns against ETFs that follow a benchmark.

 

[NW-Bound]

I have to say Vanguard is very creative in the ETF space!!!

Are you sure this is not satire? Hmmm.........

Look how each of the 26 ETFs all beats the S&P.

 

[audreyh1]

Look how each of the 26 ETFs all beats the S&P.

It looks like a legit ETF blog overall with no clues otherwise in this article. So - why now and not April 1 as OP suggested?

 

[Bestwifeever]

Satire? Well, There is this in that link:

While this blog post is pure satire, it helps highlight the inherent dangers in some of the approaches being used in product development—specifically the use of niche indexes and historical backtested (or in this case backfilled) information that may be aimed at anchoring expectations of future performance. Its intent is simply to challenge investors of any investment product (including, but not limited to, ETFs, traditional mutual funds, market-cap-weighted approaches, and alternative-weighted approaches) to continue to “look under the hood” in their due diligence process and fully understand the investment rationale, approach, and fit with their own goals and objectives apart from sponsors’ marketing claims and presentations.

 

[audreyh1]

Satire? Well, There is this in that link:

Oops - somehow I didn't catch that disclaimer.

 

[Bestwifeever]

I know, it was "buried in plain sight" near the end. I just couldn't believe any outfit would claim all of its new etfs would beat the S&P so I looked for it.

 

[pb4uski]

Oops - somehow I didn't catch that disclaimer.

I did, but not before getting steamed that my cherished Vanguard would do something so chintzy - so I was relieved when I saw it - hence the April 1 suggestion.

 

[NW-Bound]

In all seriousness, I do not think sector ETFs are as ridiculous as these phony "Alphabet ETFs". I have owned several SPDR's, the grand daddies of the current ETFs, since 2000.

These sector ETFs are a good way for a slicer-and-dicer to look inside the market to see what sector becomes "too hot to handle" and which becomes undervalued. These are useful to people who believe in value investing, or want to be a contrarian.

 

[CCdaCE]

I would like the fact of an equal weighting as opposed to cap weighting of a new ETF. Just because something becomes overvalued in an index, I don't want to buy more.

It took awhile for any/everyone to catch?:

While this blog post is pure satire...

Maybe audrey1 just didn't wanna spill the beans.

-CC