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    Banned Melonie's Avatar
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    Default another ETF making a 'timely' entry ...


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    Veteran Member StuartL's Avatar
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    Default Re: another ETF making a 'timely' entry ...

    I'd not spotted that. Interesting to see.

    In the UK we have had a number of 'bear' funds for a number of years. In fact, we have a US Bear Fund. They aren't ETF's as such, similar, but not the same.

    For the investor that really plays the game, these can be great. Almost like spread betting down with much less risk than playing an index in such a leveraged format.

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    Banned Melonie's Avatar
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    Default Re: another ETF making a 'timely' entry ...

    In the USA at least, it is very easy for a small individual investor to buy a stock or ETF at reasonable commission rates. It's generally much more difficult to set up accounts which allow short selling, buying and selling options etc., which have to date been the only truly 'cost effective' methods of profiting in a declining market.

    True there have been a few 'bear' funds out there for quite a while, but they tend to 'siphon off' a pretty high degree of profits to cover management fees etc. A contrary ETF makes it possible, for essentially the first time, for a small individual investor to easily play the 'downside'. and actually keep the vast majority of profits for themselves.

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    Senior Member stitch132's Avatar
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    Default Re: another ETF making a 'timely' entry ...

    Do we know yet what the ETF total expense ratio will be? The Profunds Bear (inverse of S&P500) mutual fund is about 2.5%.

    A benefit of ETFs is that there is no restriction on rapid trading -- whereas many brokers limit the number of "roundtrips" you can make in and out of any particular mutual fund during a given time period.
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    Default Re: another ETF making a 'timely' entry ...

    Expense ratios on ETF's are typically less than 0.5%, with buy/sell commissions on the same level as regular stock shares. As you point out, this compares to typical mutual fund expense ratios of 2% plus, as well as possible front/back end loads. Also as you point out, frequent trading penalty charges or outright 'round trip' time limitations now often apply to mutual funds as a result of past 'market timing' complaints, whereas ETF shares can be traded as often as you wish with no extra expenses involved other than standard broker commissions.

    As you have probably gathered, I am not a big fan of mutual funds. Mutual fund management has in effect spawned an entire 'financial industry' unto itself, and the costs of operating that industry are paid for by legally 'skimming' or 'controlling' potential mutual fund investor returns. IMHO if a person understands their own investment goals well enough to pick a mutual fund, they are also able to pick an ETF or some particular company stocks and thus avoid paying a hefty 'cut' to a mutual fund company and manager.

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