Monday, April 2, 2007

ETF is Smarter than the Smart Fund Managers

Nilanjan Dey has a useful and informative article on Index funds in Business Line. He writes about ETFs and how they have outperformed actively managed funds in the last fiscal year. He asks some very relevant questions about investing. Go to the article
Even though the actively managed funds have done better on a 3/5 year scale, the net difference would be lower or non existent because of the higher cost. The active funds charge you 2-2.5% while the ETFs charge around 0.5% only. The extra Fund management charges will even out the difference, I guess.

I wonder why a good product like index funds does not sell like hot cakes. Comparatively an expensive product like ULIP is selling like hot cakes even though it is much more expensive than the MFs??!!

I guess it boils down to lack of knowledge/information and that the agents have no interest in selling them.
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