About Michael A. Weiss, CFA Expertise I can provide high quality answers to questions about mutual funds domiciled in the United States. Overall, I have 15 years of investment experience. I am currently the Editor of The Mutual Fund Investor, a quarterly publication that provides recommendations and commentary on various no-load mutual funds. I am also currently the Chief Investment Officer of a state registered investment advisory firm that specializes in no-load mutual funds.
Experience Overall, I have 15 years of investment experience. I am currently the Editor of The Mutual Fund Investor, a quarterly publication that provides recommendations and commentary on various no-load mutual funds. To learn more about The Mutual Fund Investor, please visit http://www.mutualfundinvestor.net/. I am also currently the Chief Investment Officer of a state registered investment advisory firm that specializes in no-load mutual funds.My mutual fund experience began at a company called Lipper Analytical Services, where I researched and wrote about mutual funds. Lipper is one of the premier mutual fund research and ratings organizations. After Lipper, I worked as an investment analyst for Merrill Lynch’s multi-billion dollar Mutual Fund Advisor and Selects Programs. I also have experience working with individual stocks and bonds. I have managed investment portfolios for both Merrill Lynch Investment Managers as well as Evergreen Investments.
Organizations CFA Institute
CFA Society of Philadelphia
Publications The Mutual Fund Investor
Education/Credentials CFA charterholder
MBA in Finance and Investments from the Zicklin School of Business at Baruch College
Expert: Michael A. Weiss, CFA Date: 10/7/2007 Subject: ETF and Mutual Funds
Question Hello!
I am 32 and have began to invest for retirement.
I have a couple questions if you don’t mind:
1) I plan to start an 403B and an IRA. I have some investments in mind (eg: Int value funds, U.S. Value funds, S&P 500 index funds etc).
Now my question is to fit these investments I have in mind, should I choose Mutual funds or ETF’s?
2) I noticed that when I go to buy a mutual fund through a broker, I am charged a transaction fee (say $20). I heard that if I buy that same mutual funds directly through the company that offers it I pay no transaction fee. For example, if I want to buy a Vanguard Large Cap Mutual Funds from Scottrade I would pay say $20 in fees. But If I bought that fund directly from Vanguard there would no fee.
So if this is the case, then why do people buy mutual funds through a broker vs directly from the company.
Thank you
Asad Raza
Asad_raza5367@hotmail.com
Answer Hi Asad,
Thank you for the question. There are a few things to consider here. First, when you say mutual funds, are you referring to actively managed mutual funds or index funds?
Some studies and opinions suggest ETFs are a little better than index mutual funds due to tax efficiency(with an IRA, this would not matter) and lower fees. People actually buy either of these investments for the same reasons: tax efficiency, low fees, diversification, pure exposure, etc. ETFs may have an added advantage in that you can more easily target specific parts or sectors of the market. However, ETFs can be costly for the small investor as you may have to pay a commission each time you trade. On a percentage basis, the commission may be costly.
As far as actively managed mutual funds versus ETFs are concerned, it depends on your assessment about whether mutual fund managers add value. I think that index funds, ETFs and actively managed funds are all viable investment approaches.
If you prefer passive investment strategies, ETFs and index funds could work for you. I think it depends on what you are trying to achieve and how much money you plan too invest.
Also and as you mentioned, you can generally save money in fees by purchasing directly from the fund company
