We take a look at some of the experts’ opinions on Exchange Traded and Index funds
Exchange Traded and Index Funds have exploded in popularity in the past few decades. Their relatively short history has been characterised by a very impressive take-up rate from investors; according VanEck Australia, the Australian ETF market will double between 2018 and 2020.
However, given the rapid expansion, it would be reasonable for retail investors to seek out the opinions of professionals to gain confidence in these relatively new products.
Thankfully, professional investors are full of opinions, and are usually happy to share them. Below is some of the wisdom that industry and investing professionals have expressed about Exchange Traded Funds (ETFs).
ETFs can allow the individual to invest like institutional investors:
“In the ETF world you can be in any sector at any point. You can now invest more like institutions. Prior to this big explosion, retail investors couldn’t invest that way.” – Nadav Baum, Executive Vice President at BPU Investment Management
ETFs and index funds are causing fear amongst traditional fund managers:
“I am a huge, huge, huge fan of index funds. They are the investor’s best friend and Wall Street’s worst nightmare.” – Jonathan Clements, Author and writer of the popular Wall Street Journal column “Getting Going”.
Even the oracle believes ETFs and index funds are likely to be a good long-term investment for retail investors:
“The 21st century will witness further gains, almost certain to be substantial. The goal of the non-professional should not be to pick winners — neither he nor his ‘helpers’ can do that — but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.” – Warren Buffett, Investor
“A low-cost fund is the most sensible equity investment for the great majority of investors. My mentor, Ben Graham, took this position many years ago, and everything I have seen since convinces me of its truth.” – Warren Buffett, Investor
Whilst some may consider ETFs a boring investment, that doesn’t mean you are going to get poor performance:
“An index fund dooms you to mediocrity? Absolutely not: It virtually guarantees you superior performance.” – William Berstein, Author of “The Four Pillars of Investing.”
Using Exchange Traded Funds in an investment portfolio is something for all investors to consider. If you would like to discuss using ETFs in your portfolio, or even building a portfolio of ETFs/Index funds, please don’t hesitate to call Advisor Sam Green on 03 8080 5780