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  • Member News 2013

    Model Portfolio Combines Mutual Funds, ETFs

    AAII members trying to decide whether to invest in mutual funds or exchange-traded funds (ETFs) can now look to the Model Fund Portfolio for guidance. This portfolio has been revised to take advantage of the strengths of both, by combining mutual funds and ETFs.

    As AAII Founder and Chairman James Cloonan explained, ETFs offer the advantages of generally lower expenses, the ability to both get updated pricing information and buy and sell shares any time the market is open and the ability to tax-manage them according to individual requirements. What ETFs cannot do, however, is exploit the significant inefficiencies that currently exist.

    Actively managed mutual funds, which are not tied to an index, can exploit these inefficiencies. Mutual funds add value when the investment approach used provides a post-expense return advantage or reduces risk for the portfolio.


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