A recent article from Employee Benefit Advisor explored the benefits and disadvantages of exchange –traded funds (ETFs) which have experienced a recent boom in retirement planning. ETFs are funds that follow indexes like the Dow Jones & the S&P 500 by holding the assets such as stocks, commodities, and bonds that are tracked by the indexes. ETFs may only be purchased or sold using a brokerage account. The advantages of ETFS include:
- Lower expense ratios than most mutual funds
- No minimum investment requirement
- Daily trading is available
The disadvantages of ETFs:
- The trading process might be difficult to follow for inexperienced investors
- Frequent trading of ETFs can increase expenses
Does you plan investment offerings include ETFs? Is the plan sponsor considering adding ETFs to your plan?