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Rating:ETF Roundup: Jaffe Calls Schwab ETFs Email Routing List Email & Route  Print Print
Tuesday, August 13, 2013

ETF Roundup: Jaffe Calls Schwab ETFs "Mousetraps"

News summary by MFWire's editors

MarketWatch's Chuck Jaffe called Charles Schwab's [profile] Global six new fundamental index ETFs "mousetraps" for some investors, because the products may attract investors who don't need them.

Schwab's new ETFs have attracted attention because they are "cool and appealing with the potential to prove themselves as 'better,'" Jaffe writes, but that doesn't mean investors should switch from traditional cap-weighted indexes.

Fundamental indexing favors value stocks rather than big-name company stocks, and studies show that this kind of indexing performs better over the long-term, but with the stock market seeing record highs, traditional indexing may be better, Jaffe writes. Jaffe interviewed MarketWatch's Chuck Jaffe called BMO Asset Management's [profile] senior investment analyst Jeff Weniger, who said investors may not want to lose 10 percent in the short term while waiting for long term payoffs.

Jaffe also interviewed Samuel Lee, editor of Morningstar ETF Investor, who was quoted as saying, "…for the average guy, it doesn't really matter much. You want to capture market returns over time…No one should change indexes just because some new product is available."

New Van Eck Products Van Eck [profile] has out two fixed-income funds in the pipeline, Market Vectors Puerto Rico Municipal Index ETF and Emerging Markets Short-Term Corporate Bond ETF, IndexUniverse's Hung Tran writes. The former tracks Barclays Custom Puerto Rico Municipal Composite Index, which has muni bonds from Guam, American Samoa, the Virgin Islands, U.S. territories of Puerto Rico and the Northern Mariana Islands, Tran reports.

The fund may have to compete with Invesco [profile] PowerShares as the firm already provides exposure to the Puerto Rican municipal bond market, Tran reports. The second fund tracks the Bank of America Merrill Lynch 0-5 Year Emerging Markets Liquid Corporate Plus Index, Trans writes.

To read more, click here and here.  

Edited by: Casey Quinlan


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