Morningstar Advisor - October/November 2013 - (Page 10)
On Topic
Do Mutual Funds Still Have a Role?
Let us know your thoughts at magazine_editor@morningstar.com
We exclusively use mutual
funds. They have an extremely important
role to play in portfolios. It is essential to have
investments that are actively managed.
Due to the volatility and complexity of markets,
it is imperative that investments are made
by skilled, experienced, and talented managers
who can manage risk and monitor valuation.
Sam Sudame, CFA, CFP
Singer Xenos Wealth Management
Coral Gables, Fla.
ETFs are a good choice if indexing and passive
investing is your objective. But in the
areas where active management
can make a difference in
returns, ETFs can’t do the job,
unless you inject management, and
when you do that, you increase their costs,
which diminishes or eliminates the lowcost advantage of the ETF. Other than the fact
that an ETF can trade intraday, I can’t see
much difference between a managed ETF and
a good old-fashioned no-load mutual fund.
David S. Bowman, CLU
FSC Securities Corp.
Williamsville N.Y.
Our firm uses ‘40-act mutual funds exclusively,
whether they are actively or passively
managed. We believe mutual funds will
continue to play a critical role in both retail and
advisor portfolios for years to come. The ETF
space has had a positive influence on the
fund world in that funds have become more tax
sensitive, cost conscious, and transparent.
But I do not see mutual funds
going the way of the dinosaur as
some have predicted. There has been
10 Morningstar Advisor October/November 2013
a substantial improvement in the way firms
deliver information about their funds. The
industry is adapting and will continue to adapt
to a changing environment.
Jack Riashi, CFP
Bloom Asset Management
Farmington Hills, Mich.
Quick Poll (Sept. 10, 408 responses)
1 How important to you is an investment
strategy’s vehicle (open-end mutual
fund, ETF, separate account, etc.) when
deciding whether to invest in it?
be an indexer as the experts say
the numbers prove it. But I’ll take
well-managed mutual funds, especially
bond funds. I put a lot of effort in my bond
investing as I am 71 and several clients are fully
retired. I think that all those people who own
Vanguard Total Bond Market or iShares Core
Total US Bond Market ETF AGG or other
index funds are in the wrong funds. There is
the argument about the use of managed funds
versus index funds, but the discussion always
relates to stock funds. It is more obvious
that investing in one of the better intermediate
bond funds instead of an index fund will give
incrementally better results over the long run.
Gary Orkin
Orkin Financial Planning
Berkeley, Calif.
I still use ‘40-act mutual funds. I believe
in active management of investments
and am a firm believer that over time
active management will
produce better results than
following indexes.
Dennis Young
Young/Ditto Financial Group
Elizabethtown, Ky.
59.6%
Somewhat important
I am a real math guy. I have two degrees in
engineering, and I “live” in Excel. I should
Very important
32.3%
Not very important
6.9%
Not important at all
1.2%
2 Have ETFs changed the way you manage your
clients’ assets?
Yes, significantly
18.6%
Yes, somewhat
46.1%
No
35.3%
3 Has your use of open-end mutual funds
increased, declined, or stayed the same over
the past five years?
Increased
18.3%
Declined
37.3%
Stayed the same
44.4%
4 Have you ever invested or considered
investing in an active ETF for clients?
Yes
54.5%
No
45.5%
5 Have you used or considered using
a unified managed account for clients?
Yes
31.2%
No
68.8%
Table of Contents for the Digital Edition of Morningstar Advisor - October/November 2013
Morningstar Advisor - October/November 2013
Contents
Contributors
Letter From the Editor
How to Make Social Media Work for You
Do Mutual Funds Still Have a Role?
More Personal Than Finance
How to Handle Your TIPS Positions
A Real Estate Veteran Starts From Scratch
Investments á la Carte
Investment Briefs
When to Say No
Take a Guarded Approach to Homebuilders
Fund Distribution Has Been Turned on Its Head. Now What?
Winning the Distribution Battle
Active ETFs Wait for Their Heyday
A Fund Firm Defies Indexing Trend
Piloting New Channels
A Good Fit
The Predictive Power of Fair Value Estimates
Does Being Prudent Pay Off?
Utilizing Utilities’ Total Return
Stuck in the Middle Is Not a Bad Place to Be
Our Favorite Mutual Funds
50 Most-Popular Equity ETFs
Undervalued Stocks With Wide Moats
The Good Guys Win
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