U.S. Stock ETFs Decouple From U.S. Economic Concerns

A weak economy hasn't kept investors from loading up in consumer ETFs

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U.S. Stock ETFs Decouple From U.S. Economic Concerns

While a great deal of this is clearly attributable to central bank policies, Josh Brown of the Reformed Broker blog may have come up with another savvy explanation.He wrote,

“The vast majority of this snowballing asset base being reported by both wirehouse firms and RIAs is being put to work in a calm and methodical fashion: long-term mutual funds, tax-sensitive separately managed accounts and, of course, index ETFs. In fact, Vanguard’s share of all fund assets – now approaching 20% or $2.3 trillion – is the vexillum behind which the entire do-less movement marches. It means that, almost no matter what happens, each week advisors of every stripe have money to put to work and they’re increasingly agnostic about the news of the day.”

How might one sum up the implication of this commentary? If Brown is right, the surging popularity of the fee-only management structure itself, where less transaction-based trading is the norm, cash goes into Vanguard stock indexing and it rarely leaves. I’m not so sure. ETFs were meant to be traded, including Vanguard ETFs.

It follows that there will be a bear market someday… and neither Fed policy nor fee-based Registered Investment Advisers will be able to stop it from occurring. That said, the sensible Registered Investment Advisers will have a plan in place to minimize losses when the inevitable bear shocks do-nothing participants.

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Disclosure StatementETF Expert is a web log (”blog”) that makes the world of ETFs easier to understand. Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc., and/or its clients may hold positions in the ETFsmutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationship.


Article printed from InvestorPlace Media, http://investorplace.com/2014/03/stock-etfs-xlv-xrt-xlb-xlv/.

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