Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Vanguard's Active Funds Are Cheaper Than Your ETFs Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, August 05, 2014

Vanguard's Active Funds Are Cheaper Than Your ETFs

News summary by MFWire's editors

You gotta love the exceptions.

So, the general rule is that ETFs cost less than active funds, and this savings translates into a performance advantage for ETFs over comparable active funds because less is skimmed away from the returns, right?

Well, it seems like once again, Vanguard is turning conventional wisdom on its head, according to Lewis Braham at Barron's.

Braham's writes that many -- admittedly not all, but still many -- Vanguard active funds are cheaper than their ETF competitors that provide comparable coverage, and also perform better than their benchmarks over the long term.

He raises the obvious question: so why bother with ETFs?

Apparently, ETFs do provide advantages in terms of consistency, he writes. Which makes sense, given that ETFs follow -- more or less -- their indexes while active funds have, well, active managers.

Also, not all of Vanguard's funds are all-stars, according to Braham. Some funds have huge PM teams, demonstrating the "too many cooks in the kitchen" effect.

There can also be trading costs.

Finally, Braham writes, there is the tendency of investors to buy active funds when they are at their peaks, only to later suffer from corrections, volatility, etc. This one is hardly the fault of Vanguard, or of any active managers though, scratch this one down to the wonders of behavioral finance. Those with self control do well over ten-year periods.

Read more in Barron's

Edited by: Tommy Fernandez


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

0.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2018: Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly




©All rights reserved to InvestmentWires, Inc. 1997-2018
40 Wall Street | 28th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use