Trading Vindication?

I always like to find real experts, people who are educated in financial matters, certified financial planners, who agree with me. Of course I ignore the ones that don’t agree with me but don’t we all. Actually I listen to them too but I decide if I’m going to give their arguments any credence.

My feelings about investing, specifically investing in index funds versus actively managed mutual funds or even picking stocks yourself, have been discussed in previous posts ( Products and Experts). And I’d like to offer this article as vindication. Smart Money asked William Bernstein of Efficient Frontier Advisors if he was against all forms of active investing. Even ETFs.

Bernstein: “I’m not tatally against active investing. I think if you diversify properly, it’s OK to invest actively…The average Vanguard plain-vanilla index fund is probably slightly better than the average ETF.”

This post on PFBlog also references a Smart Money article and quotes:

“Of course, apples to apples comparisons of index fund fees with ETF fees aren’t exactly fair to begin with. That’s because, for now, ETFs can be purchased only through a broker, a transaction that in itself involves a fee. Most index funds, on the other hand, are available without a transaction fee when purchased directly through the issueing fund company.”

The above statement sounds a lot like this from my post titled Products:

“the nature of ETFs lends itselft to active trading, with a transaction cost every time you buy or sell.”