The race to zero in the ETF world has its first winner. On February 25th, online personal financial services company Social Finance, Inc. (SoFi) announced the industry's first zero-fee ETFs. The filing consists of four ETFs in total, with two of the funds (SFY, SFYX) having fee waivers in place until at least March 27, 2020, effectively bringing their total fund expenses to zero for the first year of operation. But much like a buy one get one free offer, it is not immediately evident that a zero fee ETF is always a good value. We believe there is more to the story, and make the case below.
Execution is everything
Do your job. This simple three-word phrase has served as the mantra for the New England Patriots and their long-time coach Bill Belichick during their incredible run since 2000. Being from North Carolina, I’m proudly a Panthers fan, but I have always respected and appreciated the ‘Patriot way.’ Six Super Bowl wins in nine appearances is a spectacular achievement, particularly in a sport theoretically geared to ensure parity and discourage dynasties.
Topics: Advisor Practice Management
The active vs. passive debate reached a fever pitch on Monday when Jeff Gundlach referred to passive investing as a ‘mania.’ As expected, Vanguard quickly defended passive index funds by saying that “the data simply does not support his claims.” There is certainly nothing new about this debate. It’s been escalating since the first index funds were launched in the mid-70’s. However, moments like this remind the Blueprint team why we utilize passive index funds in the first place –they are the tools we use to build portfolios on behalf of our clients.
The movie “Moneyball” has an interesting scene in which General Manager Billy Beane is debating his scouts on how to best replace two key players lost in free agency given the team’s limited budget. The scene contains a back and forth between Beane and several scouts discussing and clearly disagreeing about “the problem.”
“You’re not even looking at the problem”, Beane declares.
Late last year, it was clear to us as we listened to our clients that a correction in the US markets was a primary concern. There also seemed to be a prevailing wisdom that such a correction, if it occurred, could likely lead to a bear market. While we do not allow the news or anyone’s feelings about markets to influence our investment decisions, we do use them to inform what we analyze and write about. This led to a question. (In my best Dwight K. Schrute voice) “Question: do sharp declines in US Equities act as a precursor to bear markets? False!” The data says they do not.