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What's An Asset Allocation ETF Really Worth ?

TedTed
in Fund Discussions
FYI: There are 40 exchange traded products in the asset allocation category—most of which are young with short track records.
Years ago, when financial advisors had a monopoly on asset allocation decisions, fees ran rather rich. Lately, though, with a surge in the number of index-based products promising to deliver asset allocation on the cheap, costs are shrinking. That’s a boon for investors but, as always, leads us to wonder if they’re getting value for the money.
Regards,
Ted
http://wealthmanagement.com/print/investment/what-s-asset-allocation-etf-really-worth

Comments

  • davidrmorandavidrmoran
    This nice piece of work is, by the end, unwittingly revealing in ways the author may not realize. At least the headline is right and the right question is posed. There's a cost for convenience, absolutely. Can you replicate AO_ slightly more cheaply? Sure. What are your labor and time in doing so worth? The convenience charge seems tiny, and the handiness, ability to set/forget, and/or to juggle/balance/trade are, well, it depends, small, large, something in between? As for the Sharpe and alpha deltas, well, they're tiny too. But wait, look at the buried caption, ooh, the two winners, the autogliders, that marginally beat the AO_ group, what's happening to them? Why, they're closing and liquidating in six weeks. Oops. I wonder why. Maybe they shoulda charged a little more? Of course their AUM were 1/4 the AO_ series. Why was that? What are the lessons in all of this? He does not say.
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