Investment Preference: ETFs or Open End Mutual Funds

[chinaco]

Which is your preferred method of investing in a group of stocks? Sorry stock pickers... this is poll is for us lazy people.

Edit: I added Closed End Funds to the poll

ETFs seem to have gained in popularity.

If you prefer one over the other please leave a comment about why you use one over the other.


I currently use open-ended mutual funds. Mainly index funds. I have not used ETFs so far because I do no do much trading so I have not needed the ability to sell more than my funds rules allow. Plus, I do have the need to try to sell during the markets open hours.

 

[LOL!]

ETFs hands down for me. Main reasons: lowest expense ratios, can buy/sell intraday (such as at low point in Aug 16th), can submit limit orders (so I know in advance the worst price I will get), can do tax-loss-harvesting trivially, can get exact asset class I want, don't have to wait for fund company to update price in the evening, and no-commission transactions.

 

[kumquat]

ETFs hands down for me. Main reasons: lowest expense ratios, can buy/sell intraday (such as at low point in Aug 16th), can submit limit orders (so I know in advance the worst price I will get), can do tax-loss-harvesting trivially, can get exact asset class I want, don't have to wait for fund company to update price in the evening, and no-commission transactions.

Right on!

 

[Moemg]

Where is the option for all of the above because that's my style ?

 

[tightasadrum]

Not sure I have a preference, have all. Have only recently purchased ETF's, so the jury's still out on them. However, I have enjoyed, or obsessed, being able to see the intra day movement. I'll probably keep all types, even within an allocation class, and compare how my decisions do compared to a fund manager or Mr. Market.
Oh, I didn't vote. Didn't want to skew the data since "all the above" was not offered.

 

[ats5g]

We don't use MF's b/c (1) we don't have a whole lot of money in acct's in which we could buy ETF's, (2) our MF's are as cheap, or cheaper, than ETF's, (3) we don't have a taxable account yet.

 

[Nords]

ETFs:
- Generally lower expense ratios
- No 12(b)1 fees
- No transaction fees
- No frequent-trader fees
- No chance of "style drift"
- No problems with managers "seeking alpha", even if they're Gus Sauter
- No manager issues whatsoever (Fidelity's revolving door)
- No fund bloat
- Fully invested (no cash positions for possible shareholder redemptions)
- No huge discounts/premiums to NAV (this is typically a CEF issue)

 

[FinanceGeek]

ETFs for me, but don't rule out CEFs - especially since quite a number of them have been converting to open end of late.

 

[megacorp-firee]

and no-commission transactions.

where do you get no commission expenses for transactions?

 

[LOL!]

where do you get no commission expenses for transactions?

WellsFargo. Their ads are all over this forum.

 

[megacorp-firee]

WellsFargo. Their ads are all over this forum.

How do they make money then?

 

[LOL!]

They make money just like all the other brokerages: they pay a low interest rate on their cash sweep feature. You can keep your cash elsewhere if you like.

You can search this forum and others for comments and reviews about the free trades at WellsFargo.

 

[walkinwood]

I dollar cost average into my investment portfolio on a monthly basis, so MFs are a lot more cost effective for me. I thought of moving a bulk of my taxable investments into 'like' ETFs, but that would trigger capital gains taxes, so I've left them in MFs.

Most of my IRA investments are in bond funds.

 

[Eyerishgold]

I'm forced in my 401k to use open ended mutual funds. In my IRA and in my regular brokerage account I use ETF's.

 

[kaudrey]

I have both.

 

[JustCurious]

I prefer low cost index mutual funds because:

1. No transaction fees to buy and sell, which could be particularly expensive if you make regular monthly contributions.
2. No bid/ask spreads.
3. Mutual funds provide automatic reinvestment of dividends, and to my knowledge, ETFs do not. (I know that some brokerages provide this service, but not everyone invests with a broker, and it is still an advantage that mutual funds have over ETFs)

 

[megacorp-firee]

I prefer low cost index mutual funds because:

1. No transaction fees to buy and sell, which could be particularly expensive if you make regular monthly contributions.
2. No bid/ask spreads.
3. Mutual funds provide automatic reinvestment of dividends, and to my knowledge, ETFs do not. (I know that some brokerages provide this service, but not everyone invests with a broker, and it is still an advantage that mutual funds have over ETFs)

Number 3 could be a biggie, especially for us buy and holders. Does anyone have any acutal experience with this (i.e. reinvestment of dividends for ETFs).

 

[unclemick]

In 14th year of ER - age 64 simplified even further(from index funds) to lifecycle in jan 2006:

100% retirement = or 85% of portfolio is Target Retirement 2015 AND for the mighty putz or just plain dinking around = 15% Norwegian widow stocks.

At least until I break down and buy that kayak. Auto rebalance and auto deduct. The stocks are sorta like when I was a little kid and got sent outside to play until suppertime.

heh heh heh - Real money and play money!

 

[yakers]

At least until I break down and buy that kayak.

Go ahead, get that kayak. You know you want to, why resist?