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The Fundamentals of Exchange Traded Funds
Exchange traded funds (ETFs) are increasingly becoming a staple of investment portfolios.
The reason? Cost and tax efficiency, trading flexibility, and a wide range of fund choices that combine targeted exposure with diversification. Let’s start with the basics.
Let’s build a better investment world.
Low cost Expense ratios for ETFs tend to be significantly lower than those of traditional mutual funds. Higher expenses can adversely affect fund performance.
Risk management
The trading flexibility and transparency of ETFs may provide the opportunity to better manage risk.
Access an asset class or targeted market segment in a single transaction
Buy/sell throughout the trading day
Place stop and/or limit orders
Buy/sell short in margin accounts1
ETF’S holdings are published daily
Pricing of underlying holdings is refreshed continually
Remove style drift and active risk
Options available on some iShares ETFs3
Tax efficiency
Like higher expenses, taxes can adversely impact fund performance. Index funds typically buy and sell securities less often than actively managed mutual funds, decreasing the likelihood of capital gain
distributions.
In addition:
Mutual fund shareholders purchase and redeem shares from the fund, which may result in capital gains distributions to all shareholders.
ETF shareholders buy and sell shares on an exchange—a transaction that does not affect other shareholders. Of course, ETFs can generate capital gains, but not as a result of other investors’ activities.
Know the differences
While ETFs and mutual funds each hold a basket of securities and are obliged to distribute gains to shareholders, some key differences do exist.
Exchange Traded Funds ETF s
Trade on exchanges intraday at market price, which may be greater or less than net asset value
Shares of ETFs are not individually redeemed from the fund
Mutual Funds
Accessed directly from the fund company or through a select broker
Pricing generally occurs once a day
Investors buy or redeem shares at the end-of-day net assetvalue, less any applicable fees
May charge sales loads or redemption fees
Active funds typically charge more than index-linked products for the increased trading and research expenses that may be incurred
Common uses of Exchange Traded Funds, (ETF’s)
Diversification n Cash equalization
Portfolio completion n Duration/credit adjustment
Sector rotation Hedging
Tax-loss harvesting n Manager replacement
TGA Capital Management is one of the most trusted fiduciary, advisory firms, serving business owners, and individuals. TGA Capital Management combines market-leading business consulting expertise with decades of real-world experience and collaboration with a cost versus value optimization.
TGA Capital Management and Vanguard offers the tools and resources to service the qualified retirement plan and individual marketplace with confidence.
Individuals look TGA Capital Management to provide our low-cost predefined Exchange Traded Funds, ETF’s, managed account offering; Growth, Moderate Growth, Bond income constructed portfolios to simplify and provide our expertise in allocation selection.
With our knowledge and expertise, you will have a cost-effective, fully transparent, streamlined managed account and ongoing advisory to meet with on a continual basis, along with 24/7 account access, participant email alerts, educational website(s) and an earnest, prudent advisory committed to your (ROI), return on investment.
In the interim, please review our managed account reporting as shown below.
Our latest 2017 Year-To-Date (100 Highest YTD ETF returns) is available below.
Contact us.
Michael D. Green, Principal
TGA Capital Management.Com
25 Braintree Hill Office Park
Braintree, MA 02184
A Registered Investment Advisory, RIA
Mgreen@tgacapitalmanagement.com
https://www.linkedin.com/in/tgagiacapitalmanagement
1.508.224.9646
This is not a solicitation nor recommendation to buy or sell a securities nor to imply any tax or legal advice, always seek a registered investment advisor to attain your risk/averse attitude and investment suitability before investing. All information is considered accurate and reliable, however, due to changing market, economic, taxation, institutional, and other pertinent potential cycles and variations, future results cannot be guaranteed by past performance and should be monitored on a continual periodic systematic basis to provide current advisory recommendations that meets the client short-term potential deviations and management disciplined style, while advisory provides solely long-term recommendations. Confidentiality Notice. The information in this e-mail and any attachments is confidential and may be privileged or protected by other rules, including but not limited to the Electronic Communications Privacy Act, 18 U.S.C. §§ 2510-2521. It is intended solely for the addressee(s). Access to this e-mail by anyone other than the addressee(s) is unauthorized. If you are not the intended recipient, you are not authorized to and therefore must not disclose, copy, distribute or retain this message or any part of this message.
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