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Are You An ETF ‘Trader’ Or An ETF ‘Investor’?

TedTed
in Fund Discussions
FYI: It’s often said the exchange-traded funds have “democratized” various investment strategies, meaning that they’ve given ordinary Joes and Janes access to leveraged strategies, commodities, and factor-based “smart-beta” methodologies that were previously limited, until recently, to big institutions.
This democratization means different things to wholly different types of people: “traders” and “investors.” Which are you?
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2016/08/08/are-you-an-etf-trader-or-an-etf-investor/tab/print/

Comments

  • rforno
    Trader. I use options on ETFs for *periodic* speculation, but don't hold ETFs long-term, preferring instead to use OEFs instead.
  • Soupkitchen
    rforno, what are your reasons for preferring to hold oefs instead of etfs?
  • rforno
    edited August 2016
    For long term investing, I can easily automated DCA additions to mutual funds. ETFs or stocks I need to do manually, and incur a commission. Plus, I am not comfy with how ETF shares are constructed/redeemed. As such, my only ETF trading are options on highly liquid index ETFs to speculate on short ideas -- which I tend to suck at anyway. :) IMHO they were designed for short-term trading ... although certainly many services/people hold them for prolonged periods, too.

    Plus, OEFs, since they price only once per day, are harder to 'trade' (and thus less attractive to many) than ETFs so that helps keep volatility down on them somewhat, too --- I think.

    I like my long- long- long-term investment positions to be boring and plodding, both in growing returns responsibly over time and in their construction. The OEFs that I hold fit that bill nicely and allow me to sleep well at night.

    WhaI do NOT like about OEFs: loads, 12(b)-1 fees, and in some cases (*cough* American, looking at you) the insane number of meaningless moneygrubbing share classes. Accordingly, i refuse to pay loads or (usually) 12(b)-1 fees on the OEFs I might consider owning. (I don't worry much about taxes on them, since I can offset those gains elsewhere.)

    Amonst my various taxable and non-taxable accounts, OEFs are about 30% of my total assets.
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