I started by writing out the title of this post when I suddenly wondered why it sounded so familiar… did I already write about this? Yes. I did. So I looked it up on the archives for the blog and lo and behold, there it was. I went over to take a look and while I had written it about 10 months ago, there isn’t anything I would change about it.
With actively managed ETF filings absolutely exploding right now, it’s more pertinent than ever that we stop interchanging “ETF” with “indexing” or “passive”.
Click here to read my original rant “ETF Does Not Mean Index”.
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Hmmm, maybe by some reverse process, mutual funds will go from their too-high MER state to low cost passive, broad-market index funds. As is obvious from the evolution of ETFs, the ETF vs mutual fund debate is not about the inherent qualities of each structure but how they are (mis)applied. Mutual funds have some excellent features that most ETFs don't have - no commissions, which mean easy to buy in small quantities, which in turn facilitates regular savings; tax accounting / ACB tracking done for you, automatic dividend reinvestment, systematic withdrawal plans.
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[...] there is money, there’s the financial industry to screw you out of it. Thus, there are now products that are not really passive but claim to be, issuers encouraging investors to purchase a multitude of niche products and products which promote [...]