Switching from Index Funds to ETF's

[Craig]

For those who have significant experience and investments in ETF's ... is it a good strategy to DCA into index funds over a period of time (say, a year), and then occasionally to swap into a comparable ETF? I understand the commissions will eat up the expense ratio savings in a DCA situation, but those low expenses seem to make ETF's an obvious preference over index funds with the same investment mix.

Thanks.

[JPatrick]

It probably is all about performance.* If the ETF has a dynamite record compared to the index then I'd switch.* If you feel a need to be able to bail out real quick then the ETF is better.* Of course you need to consider costs, but I'm thinking if this is long term and your index performance is OK, let it ride.
For awhile this summer I held Fido's energy fund FSENX and their energy service fund FSESX.* I switched most of that into the corresponding ETF's OIH and XLE solely to be able to write calls for added income.* But, aside from that, if you compare the charts you'll find almost identical performance.

[wabmester]

Charles, can you give an example of the funds and ETFs you're think about? Most index funds should have ERs pretty close to those of equivalent ETFs.

[Dry Socks]

Is this DCA going into a retirement account ?

If not, you'd likely end up with lots of short term gains with that strategy.

[Shredder]

I currently do not have any ETF's, but have mostly index funds at Vanguard. However one advantage I see is being able to set stop losses on a ETF, that you can't on a fund. Might help in a meltdown.....Shredder

[Repairmanjack]

Be sure to compare the expense ratio of the ETF with the comparable index fund. The ETF will not always have a lower expense ratio.

http://news.morningstar.com/doc/arti...&t1=1129645241