ETFs Offer Lower Investment Costs Than Mutual Funds

Peter Rhor, a Philadelphia-based advisor, at Merrill Lynch's Private Banking and Investment Group received an interview by Barron's in March 2014. Rhor made comments in comparing ETFs with mutual funds:

"ETFs can also be used with stop orders to limit their downside risk, .... And their design insulates investors from the bad decisions of other investors. Specifically, when impatient mutual fund shareholders invest money at market highs and pull money out at market lows, fellow shareholders suffer. And while mutual funds can provide broad market-segment exposure, they're often more expensive, .... Mutual-fund expenses average about 1%, or twice those of ETFs.

What's more, mutual funds are less attractive than ETFs when it comes to taxes. For instance, investors in a mutual fund can end up paying taxes on gains that accrued before they bought shares, which isn't the case with ETFs."

Link to the interview:

"Fee Foe Peter Rohr Points Clients Toward ETFs", Barron's March 14, 2014

http://online.barrons.com/article/SB50001424053111904628504579425433519086194.html#text.print