STOCK MARKET

"Should I sell my mutual funds and buy ETFs?" I have had this question posed to me on multiple occasions. Unfortunately, the answer is not simple and clear cut.

The question of selling mutual funds in order to buy ETFs has been a fairly common question, but, in most cases, the question is asked for the wrong reasons. The question may be asked for the following (wrong) reasons:

"I heard that ETFs outperform mutual funds."

"I heard that ETFs are cheaper that mutual funds."

�"ETFs are more liquid than mutual funds. I can sell them and avoid a market crash."

I have tackled the above�issues in previous blog posts and articles. I believe the overriding reason for these continued questions and comments is due to the grinding of axes. In other words, the $1 trillion dollar ETF industry has much to gain from the $10 trillion mutual fund industry. To quantify, they have $10 trillion to gain.

If you want to learn more about mutual funds vs. ETFs read:

Do You Understand the ETFs vs. Mutual Funds�Debate?

5 Disadvantages of Mutual�Funds

Sell Mutual Funds and Buy ETFs originally appeared on About.com Mutual Funds on Sunday, March 7th, 2010 at 11:27:45.

Permalink | Comment | Email this

Why do you have to pay those 12b-1 fees? Some folks think these fees are no good, hidden fees that are unnecessary. Others will argue that they deserve to make a living, so keep 'em coming (think: the person who sold you the fund). The truthful answer is probably somewhere in the middle.

There's been so much press on these so-called hidden fund fees lately that I posed a few questions to Morningstar. I asked Russel Kinnel, director of fund research at Morningstar, to weigh in