| Wal-Mart to Sell Generic Drugs for $4 in Florida Today I was looking at my stock ticker chart and saw shares of CVS and Walgreens plunging (I don’t own those stocks but have been watching them). I didn’t realize why until I heard the big news on CNBC. Walmart is going to start offering generic prescription drugs for just $4 in Florida and then [...]. Cisco Systems to Invest in Turkey Cisco Systems (CSCO) announced this morning that it plans to invest %24275 million in Turkey over five years...(Read More). EML - The Eastern Company Announces Stock Split Today (09/28/06) EML - The Eastern Company announced a 3 for 2 stock split payable October 17, 2006. It shares closed today at $24.79, down $0.34 (-1.39%). This stock is not optionable and has an average daily trading volume of about 3,501 shares.. No Load Mutual Funds or Exchange Traded Funds (ETFs)?
If you are fed up with early redemption charges and ever increasing mutual fund management fees on top of bad-performing fund managers, read on. There is a quiet revolution going on in the no-load mutual fund industry and you, the individual investor, may benefit from it greatly. I am referring to Exchange Traded Funds (ETFs), which have been around for years, but have grown tremendously since their inception. There are currently over 100 choices with around $10 billion in assets. In a nutshell, an ETF is a specific kind of no-load mutual fund that you might consider to be a basket of stocks. ETFs are diversified like mutual funds, only they trade like stocks. They are cheap to trade (as low as $8.00) and don’t hit you with any short-term redemption fees. And they offer investing opportunities across the board. ETFs track every index under the sun including the S&P 500, the Nasdaq 100, The Russell 2000 and many others. Available through any discount broker, they basically fall into one of three categories: broad-based U.S. indexes, sectors and international. The have esoteric names such as iShares, StreetTracks, HOLDRs and SPYDRs. The difference is in the index they are tracking and the company marketing them. You will see big name companies offering them, like the American Stock Exchange, Barclay’s Global Investors, Vanguard, and State Street Global Investors. In my newsletter I track the currently most appropriate ETFs for you to consider. For more detailed information you can visit these web sites: In addition to inexpensive trades and no short-term redemption fees, how else can ETFs save you money vs. no load mutual funds? One way is on their annual management fees. That fee for ETFs is in the area of 0.45% vs. 1.5% on average for no load mutual funds. The fees charged by discount broker are so low they almost can be disregarded, usually less than 0.1% of the transaction. For example, I have used ETFs for some managed account clients during my last Buy cycle, which started on 4/29/03, and paid $27 for a $28,000 order — and that wasn't even with the cheapest discount broker. So, if these ETFs are so great, why hasn’t your broker or financial planner recommended them to you? Simple! Brokers, and those advisors working on commissions, don’t make money on ETFs; no commissions up front or hidden on the back end. It's simply not in their interest to promote them. With all the positives for the investor, there is one disadvantage, which may not be applicable to you unless you are a hot shot no load mutual fund picker. It is that in any given economic environment really super performing mutual funds can outperform the indexes, but an ETF can never outperform the index it’s tied to. You would need to look at your own investment record to know whether this is a downside for you. Here’s a real life example from my advisory practice. My trend tracking indicator signaled a Buy on 4/29/03. Based on my momentum indicators I chose 5 no load mutual funds and 4 ETFs. Over the following 3 months my ETFs gained anywhere from +10.02% to +22.36%, while my no load mutual funds gained from +9.15% to +36.35%. If you’re fortunate enough to make a superior selection you will outperform an ETF. Of course, that presumes you picked a very successful fund as compared to only a moderately successful ETF. A word of caution! Just because ETFs are cheap and easy to buy doesn’t mean they will guarantee you a profit. You can lose money with them just as easily as you do with no-load mutual funds. You still need to make sure you have a disciplined methodology in place to help you get into and out of the market. If you don’t, you’re gambling no matter what you invest in. Having gotten the disclaimer out of the way, hopefully these insights into ETFs will broaden your perspective on ways you can prosper in your investments. © Ulli G. Niemann
This article was posted on August 17, 2003 Cash Flow StatementA cash flow statement summarizes a company's inflows and outflows of cash. This financial statement reports on where and how a company obtained its money and how that money was spent during a specific time period.. "Crucial Team Members, Setting yourself up for Success!" Setting the Stage Correctly Black Friday shopping tips The best deals aren't always on Black Friday. Many retailers will have big discounts today, but price breaks may be steeper as it gets closer to Christmas and stores need to unload inventory. Check out retailers' Web sites ahead of time. You can comparison. |