I was recently watching a news program in which a commentator generalized Exchange Traded Funds (ETFs) as “cheap” and mutual funds as “expensive”. Too often, we dismiss all ETFs as index following and therefore “cheap” and all mutual funds as being actively managed and therefore “expensive”. In reality, an ETF or a mutual fund is simply a packaging solution that can contain a variety of assets and styles of investing. In order to properly assess whether a particular solution is priced appropriately, we must first dissect the package to understand which investments are included and how they are managed.
