With new ETFs being brought to the market as fast as regulatory approval can be obtained, investors are gobbling them up at blazing speeds.
Total assets held in ETFs are approaching the $500 billion mark. Considering that it’s been only 4 years ago, that I wrote the article “No Load Mutual Funds Or Exchange Traded Funds?” designed to familiarize many readers with the benefits ETFs have to offer, their growth has truly been amazing.
While they still dwarf the mutual fund market (currently at some $9 trillion), their acceptance by the investing public has been phenomenal. You can see this increased awareness and interest by doing a search on Google for ‘mutual funds’ and one for ‘ETFs.’ The gap is much smaller there as the ‘mutual fund’ search results in 18.3 million hits vs. 11.5 million for ETFs.
Even more telling is the fact that, based on my own advertising experience on Google, interest in ETFs is 2 times that of no load mutual funds. In other words, I am getting twice as much response on ads promoting my free ‘ETF Tracker’ as opposed to my free ‘No Load Fund Tracker.’
Why does it matter?
As I have said before, if mutual fund companies don’t come off their high horse by offering lower fees and less restrictive trading rules, it will only be a matter of time before ETFs will become the predominant investment vehicle for many mutual fund investors.
Many attempts are in the works to have ETFs offered in pension plans and 401ks as well. If that comes to pass, the gap will close even faster.
Comments 2
I don’t know of any discount brokers (Ameritrade, Scottrade, etc.) who offer *commission free* dividend and cap gain re-investment plans for ETFs, as is now commonly available for mutual funds.
I don’t see how ETFs can find a home in 401ks until this condition changes.
No *commission waived* div/cap gain re-investment plans is my only gripe against them (ETFs) at this point. Maybe in order to get them included in 401ks we’ll see this change, the sooner the better as far as I’m concerned.
G.H.
You may not be correct on this one. I checked with my custodian (Schwab) and they confirmed that there are no fees charged for dividend reinvestments.
Besides, another option and my personal choice is to let dividends accumulate anyway and then re-invest a larger amount possibly in a better performing ETF.
Ulli…