A couple of years ago, Lost in Space was revived on Netflix.
#INVISOR INVESTMENT SERIES#
If you are a bit on the older end of the age spectrum, you may remember a robot that fascinated me as a child: the robot from the TV series Lost in Space (see above). If you want the automation available through mutual funds, but you don’t want the price often associated with such funds, the so-called Robo Advisor may be close to the perfect solution. If the purchase is automated, though, that problem is resolved. From personal experience, I know how difficult it can be to buy into a declining stock market. Unlike with mutual funds, though, if you are making regular contributions or there is cash left over after a distribution (dividend) payment, ETFs require you to take action to purchase additional units (shares). You buy a single product, and it is at the fund management level that the allocation between bonds and equities is adjusted to bring your account back to its target balance. In that sense, they are just like a balanced mutual fund. They remove one of the behavioural issues that I am concerned about, the gradual drift away from your asset allocation. I think these ETFs are a great solution for many investors. However, as I mentioned in my previous post, they introduce a few requirements that can lead people to behave against their best interests.Īll-in-One Asset Allocation ETFs are a Partial Solution If for no other reason, they offer the advantage of much lower costs, especially if the mandate of the fund in question is simply to track a broad market index. Despite advocating for the behavioural advantages of mutual funds in general, when the costs get this high, one has to wonder about alternatives. In the last year, I reviewed a portfolio for a client who was paying an average Management Expense Ratio (MER) of 2.49%. Although there are a relatively few mutual funds that are at the lower end of the cost spectrum, many mutual funds charge high fees. That post invited a few comments about the costs of mutual funds outweighing the behavioural advantages. In my previous post, I wrote about several advantages of investing with mutual funds. In Blog Mutual Funds Often Have a Cost Disadvantage
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