Thursday, June 24, 2010

Mutual Funds Becoming ETFs? What Next?

Wow. I've heard of mergers and I've heard of mutual funds closing to new money, but this is new. According to this SmartMoney article, Huntington Asset Advisors is planning to create an actively managed ETF fund to mimic one of their mutual funds - Huntington Rotating Markets Fund (HRIAX).

I have to say, it's not surprising given that ETFs are so insanely popular, but I'm not sure investing in it makes sense for most people.

I guess it depends on the load of the relevant mutual fund and whether there is any big difference in expense ratio and fees, but otherwise it seems to defeat the purpose of an ETF to begin with. With all these actively managed ETFs, it's really begging to beg the question of what is an ETF really?

When they first hit the scene they were primarily index funds with extremely low expenses, but that seems to be less the case with every new ETF released.

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