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Yes, of course ETFs take a cut. They are not run by non-profits. They are still a reasonable baseline and standard marker for the broader market, given their ty
by et2o 7y ago
Yes, of course ETFs take a cut. They are not run by non-profits. They are still a reasonable baseline and standard marker for the broader market, given their typically quite small management fees.
More importantly are you suggestinging individuals buy and weight all components of an ETF like VOO (500 stocks) themselves? Pretty ridiculous. Tracking error is real and there is an extreme time cost which makes hypothetical strategies like that unreasonable for most investors.
I also just don’t understand what your comment has to do with mine in the first place.
- mrep 7y ago> I also just don’t understand what your comment has to do with mine in the first place. You said "statistically you will achieve lower returns" which I pointed out is impossible mean wise due to the added fees.
- et2o 7y agoThis is just “not even wrong.” Yes, if you used a no fee broker to buy and sell (everyday...) the constituent 500-5000 stocks typically in a large index fund you could avoid the very low management fee. In practice, that’s ridiculous. The management fee on a good ETF is less than pennies on the dollar. It’s the full time jobs of many people to do this. It takes a lot of time. If you tried to replicate it yourself on an individual basis there would be significant opportunity costs as well as far increased tracking error, as well as other things I’m probably not thinking about off the top of my head. There is a reason no one does that.