This article is part of a regular series of thought leadership pieces from some of the more influential ETF strategists in the money management industry. Nate Geraci is president of The ETF Store and host of “ETF Prime Podcast.” This blog originally ran at “The ETF Educator.” Today’s piece looks at some of the best ETF quotes from industry experts.
Low Cost
“There shall be an ETF for every asset class, and it shall be virtually free to own.” – Matt Hougan & Dave Nadig via ETF.com
“One of the most attractive elements of ETFs is their cost structure. Because ETFs are based on indexes, there’s no need for a staff of two-dozen Porsche-driving Harvard MBAs, so a minimum of your hard-earned money is consumed managing the indexes.” – Motley Fool
Disruptive Technology
“The growth of ETFs in U.S. capital markets is a textbook case study in ‘Disruptive Innovation,’ right alongside well-known historical examples like Amazon, Google, Facebook, Netflix and scores of others successful enterprises.” – Nick Colas, ConvergEx
“No invention has been more disruptive to the asset management industry in the last quarter-century than the exchange-traded fund.” – Crystal Kim, Barron’s
“ETFs are fundamentally a technology. They are mechanisms to achieve a certain goal, like phones. Traditional mutual funds were rotary phones. ETFs are smartphones: They do the same thing but are in a better package.” – Dave Nadig, ETF.com
Tax Efficiency
“If there’s a comparable stock ETF available, it should be no contest after tax – the vast majority of active stock funds are likely to lag it.” – Jeffrey Ptak, Morningstar
“Those of you who make investments outside of any retirement accounts are absolutely crazy if you are using actively managed funds rather than ETFs.” – Suze Orman
ETF Impact
“Think of ETFs as the market’s version of a wolf pack picking off and weeding out the slower and weaker active fund managers in the herd, those with consistently poor returns and high fees.” – Vito Racanelli, Barron’s
Portfolio Fit Most Important Consideration
“ETFs can offer many attractive features, but their long-term value depends on how well they fit into any individual portfolio. To evaluate appropriate fit, investors have to be prepared to look under the hood.” – John Feyerer, Invesco
“95% of media coverage is on ETFs comprising 5% of your portfolio.” – Eric Balchunas, Bloomberg
Do Your ETF Homework
“Talking about ETFs is like talking about people. There are good ones, and there are bad ones.” – Jack Bogle
ETF Trading
“Have good trading hygiene. The vast majority of ETFs deliver on their core promise to investors. But if you trade them poorly, that’s probably on you.” – Dave Nadig, ETF.com
ETFs As A Scapegoat …
“Blaming a stock bubble on ETFs is like blaming MP3s for Nickelback or One Direction.” – Eric Balchunas, Bloomberg
“It’s exhausting debunking the regular stream of caustic mythology around ETFs. There’s a bull market in hyperbole headlines around ETFs, and it’s been going on since the 1990s.” – Dave Nadig, ETF.com
“Whenever something goes bad, we now blame ETFs. But it’s one of the greatest financial innovations of all time.” – Deborah Fuhr, ETFGI
… But ETFs Are Simply Investment Vehicles
“Bear markets occurred before the invention of the ETF and have occurred after. At the conclusion of the next bear market, the ETF structure will still be there intact.” –Tadas Viskanta, Abnormal Returns
“ETFs are simply vehicles to access markets. These vehicles are driven by humans. Humans, not ETFs, drive markets.” – Yours Truly
Future Of ETFs
“ETF portfolios will be the inevitable default for investors in the years to come because they are lower cost, more transparent and offer greater liquidity and tax advantages than mutual funds.” – Jon Stein, Betterment
“There is a manifest destiny for ETFs. They are the structure people will use to get exposure to securities in the future, and mutual funds will be banished to the dustbin, like typewriters have been replaced by computers. It’s just a better technology, and so it will come to replace funds over the next 20 years.” – Matt Hougan, Chairman, Inside ETFs
“ETFs aren’t just having a moment. They’re creating a movement.” – Martin Small, BlackRock
Follow Nate Geraci on Twitter @nategeraci
