Archive for ETF’s

ETF’s – Are They Performing Better in a Bear Market?

Dark times aheadIt is notorious that most of the US mutual funds have had to incur losses last year (many of them between -30% and -20%, some of them even lower). And the story got even worse – due to their massive losses, most of these mutual funds were forced to sell big chunks at their assets at a loss and reimburse the capital gains to the investors. Who in turn incurred even more losses because the of the capital gains taxes.
This was very bad for an investor, indeed. And those burned investors started to looking for alternatives. One of them, close in concept, is to invest in ETF’s (exchange traded funds). Unlike mutual funds, ETFs incur zero capital gains until an investor actually sells his shares. While turnover in an ETF’s holdings can be high, it is done through in-kind exchanges of one security for another rather than through selling and buying fractions of the funds assets. Read more