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?