A close look at money flows reveals that advisers are moving their clients out of mutual funds and into ETFs.
According to the Investment News article, ETFs: The adviser’s answer for all markets, author Richard Romey notes that in the first nine months of 2008, equity-based mutual funds had net outflows of $124 billion. That compares to net inflows of $104 billion for ETFs over the same period.
Romey reviews the basic advantages of exchange traded funds from the adviser’s point of view including their low cost and tax efficiency. Importantly, ETFs put advisers in the driver’s seat by disintermediating the active fund manager.