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Mutual funds are a dying breed. There are some exceptional ones and a couple of categories where they are sustainable: target date funds, balanced funds and alternative funds have offerings that you can't get in an ETF wrapper. I don't think it will be much longer though when only target date funds and some exceptional performers with low ER's will survive. MFO should change it's focus. Agree or disagree?
Prerequisites for most of the remaining open-end funds (OEFs) will include low costs and good returns.
Some OEFs will continue to exist since corresponding ETFs are not available (this may change in the future).
The shifting landscape will take years to unfold.
Although many mutual funds will be liquidated or merged into other funds, a sizable amount will remain.
I'd argue this is a good development since many unnecessary mutual funds exist.
Investors seeking exposure to a particular asset class or category can analyze OEFs, ETFs, and CEFs to determine the best solution.
"Financial advisors would switch from selling funds that charged commissions of any kind to selling funds that lacked commissions, while levying asset-based fees. That change has indeed occurred. Per McKinsey’s “The state of North American retail wealth management,” more than two thirds of revenues for its surveyed financial advisors now come from asset-based fees, rather than commissions."
DSnowball once wrote years ago (during yet another FLPSX doldrums period, surely) that he'd never sold FLPSX and not regretted it ultimately.
I wonder what the dates are of the last MFO mentions of these two.
Anyway, live and learn --- I did not own them this round. Danoff and Tillinghast, man.
I've let it ride since August 2011.
The total gain in a little less than 11 years is 304%.
It's been one of my "invest and don't mess with it" positions.
Ditto for FDCAX (up 421% in the same time period).
Other than the lower ER, I can do same-day transfers of money between FSSNX and other Fidelity funds, which is a big advantage to me, since many of the other funds in my IRA are with Fidelity.
What ETF(s) are you not able to purchase, that you would desire?
That said, I’ve been happy with funds and have never found myself wanting more control on real time pricing. I do like the concept of low cost / index and low cost etf. I just don’t own any etf’s. Don’t want to hijack this thread for an ETF vs Mutual Funds one - unless golub1 intended it. But I do want to learn more about what I’m potentially missing by not being in ETFs. I guess the “comfort” of long term historical comparisons with mutual funds and the tools have kept me in funds.
Edit: Add… Author mentioned target date funds as a survivor. I’ve never been a fan of this “set it and forget it / auto-rebalance model”. Also liked @Tarwheel mention of FSSNX as an example of a low ER. There was a lot of meat/reasoning in @LewisBraham response- I’ll research further.
I have invested in Fidelity’s zero expense total market fund (FZROX) since near its inception for our taxable savings. It’s returns have matched comparable funds and ETFs with no added expenses and it’s very tax efficient.
Since this forum is not moderated, I would suggest that everyone do the idiot-simple 'is this true?' test before posting.
You seem to keep having a problem with my posts. May I suggest you just ignore them or me? I will gladly do the same for you.
Another advantage, although this is debated somewhat, is tax efficiency. The in-kind redemption system via authorized participants gets appreciated stock out of the ETF without realizing any taxable capital gains inside the portfolio that have to be distributed to shareholders. This added efficiency should be true for most ETFs, except for Vanguard's, which for complicated reasons I'm too tired to explain aren't more efficient than Vanguard's index mutual funds as they are actually another share class of those funds.
What I quoted was a 2017 piece that gave the number of NTF OEFs and ETFs then available through Fidelity. (Now all ETFs are traded w/o commission.)
Fidelity's screen shows 2426 ETFs and 80 ETNs available.
(FWIW, Schwab's shows 2195 ETFs
Fidelity's fund screener shows 10624 "funds" (share classes), including leveraged, inverse, and closed funds.
IMHO this perspective is backward. This added efficiency is true for Vanguard ETFs as well - so far they have been able to dump all gains onto APs. As a result, it is not that Vanguard's ETFs are less efficient than those of other families, but that Vanguard's OEF share classes are more efficient than mutual funds of other families.
To my original question: I didn't understand your full meaning to represent Fidelity Investments and "their" etf offerings.
I will agree on this; but for a beginning investor reading this discussion or as with @hank who just opened a Fidelity account, they need to know and understand that Fidelity offers an investor a wide open list of etf's to purchase., as @msf noted previously.
Most of Vanguard's ETFs were created as a new share class of an existing mutual fund.
Former Vanguard CIO Gus Sauter even patented (expires 2023) this innovative solution.
This solution increases the tax efficiency for associated mutual funds.
Dan Wiener from "The Independent Advisor for Vanguard Investors" compared the after-tax returns of Vanguard ETFs with their corresponding mutual funds.
Some ETFs had a small advantage of several bps but the same was true for some mutual funds.
There also were ETFs and mutual funds which generated identical after-tax returns.
The following Bloomberg article from 2019 discusses Vanguard's mutual fund taxation in more detail.
Here's Barry Ritholtz's take.
Funny thing about that - I still say Fund Alarm when telling my husband something I read at MFO so he will have continuity of identity with the group I am referencing.
Haven't looked at MA ETFs anytime recently, but if anyone has knowledge of any worth examining, bring it on.