Exchange Traded Funds (ETFs)
Good performance, low fees, high profits for you.
Many traditional mutual funds do not beat their reference index (benchmark). So why pay a high fee for low performance? Instead, invest in cost efficient Exchange Traded Funds (ETFs) and save more money for your retirement.
Good Performance
Recent short- and long-term studies show that about 80% of traditional, actively managed mutual funds do not beat their reference index (benchmark). This means, that your fund manager charges a high fee (usually about 1.5 %- 2.5% per year) but does not create any added value for you. Instead, you would have been better off just investing in the index itself. With Exchange Traded Funds (ETFs) you exactly do this: Exchange Traded Funds usually closely replicate a market index and therefore usually beat 80% of comparable actively managed mutual funds.
Low Fees
ETFs are not actively managed therefore charge a much lower management fee of only 0.2% - 0.8% per year. Additionally, ETFs are usually very liquid and can easily be traded via any bank or (discount) broker.
Please also note the following fact: Funds / ETFs are usually used as a long-term investment instrument. Therefore the onetime fee to buy/sell ETFs is much less grave than the annually recurring management fee.
High profits for you
To see how important low annual fees are, please have a look at the example diagram below. The example shows the result of putting 500$ per month into a fund savings plan with an annual fund yield of 7.5%. The "small" difference is that the mutual fund charges a 2.2% annual management fee while the ETF only charges a 0.4% annual management fee. The difference after 30 years is very substancial: 176'000$ more retirement savings with the ETF!
EFTs are ideal for long-term investments
For longterm investments, ETFs on stock indices are ideal as they combine the high long-term yield of stocks with very low transaction and management fees.
