The Oversold Benefits Of ETFs, Behavioral Financial Planning Mistakes To Avoid, And More

The Oversold Benefits Of ETFs, Behavioral Financial Planning Mistakes To Avoid, And More
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This week on the podcast: Ben Johnson on the oversold benefits of ETFs; three value funds heavy in tech; behavioral mistakes to avoid in financial planning; Travis Miller with utilities for long-term, fundamentals-focused investors; a top pick among long-term muni bonds; and Ilyce Glink on the financial and psychological benefits of paying off your house before retiring.

The Oversold Benefits Of ETFs & Behavioral Financial Planning Mistakes

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Q2 hedge fund letters, conference, scoops etc

DG Value Adds 36.4% YTD As Distressed Stocks Surge

Dov Gertzulin's DG Capital is having a strong year. According to a copy of the hedge fund's letter to investors of its DG Value Partners Class C strategy, the fund is up 36.4% of the year to the end of June, after a performance of 12.8% in the second quarter. The Class C strategy is Read More


Welcome to the investing insights podcast from This podcast is brought to you by the Morningstar channel for Roku. Enjoy insightful independent video content in your living room. Download the Morningstar channel to your Roku today. This week on the podcast. Ben Johnson on the oversold benefits of ETF. Revalue funds heavy in tech. Behavioral mistakes to avoid in financial planning. Travis Miller with utilities for the long term fundamentals focused investors. A top pick among long term muni bonds. And Alise Glink. On the financial and psychological benefits of paying off your house before retiring. Let's get started. Ben Johnson discusses the oversold and oversold benefits of ETOPS.

Hi I'm Christine Benz from Morningstar dot com exchange traded funds have gained market share at the expense of traditional index funds but have some of their benefits been oversold and have some of their benefits been undersold. Joining me to discuss that topic is Ben Johnson he's director of global ETF research for Morningstar. Ben thank you so much for being here. Thanks for having me. Christine you wrote a great piece in Morningstar ETF investor we also ran it on Morningstar dot com looking at maybe some of the underrated elements of ETF as well as some oversold or overrated elements. One of them you say is liquidity the ability to trade ETF intra day. Talk about why you think that maybe kind of an oversold benefit.

I think liquidity and the ability to trade all day every day is simultaneously somewhat overrated and kind of out of frame it doesn't paint the whole picture of the flexibility of ETF as an investment wrapper because at the end of the day that's that's all they are. It's a form of packaging a way of wrapping up and delivering an investment strategy to investors. So liquidity I would argue is overrated to the extent that who really needs to trade exposure to the S&P 500 all day long. And if anything there's the risk of kind of you know temptation if you will that investors might trade more than they would have otherwise using an ETF as opposed to a mutual fund format. Now I would argue that there's scant evidence that this is indeed the case. The research that is out there shows that to paraphrase Taylor Swift traders are going to trade more Gummidge trade irrespective of whether they're using individual stocks crypto currencies you name it. If that proclivities their NTFS aren't going to make them any more likely to trade than they had been previously so overrated. Also as I mentioned before somewhat mischaracterized because gaffes are stock like instruments the stands for exchange traded there are other ancillary benefits that accrue to especially long term investors. In that respect to to the extent that ETF like stocks can be sold short write owners of ETF can lend them out and actually earn revenue for lending out ETF such as they might earn or lend out other securities ETF often have options associated with them. And what all of these other elements of sort of flexibility these these dynamic elements of the wrapper lend themselves to is a much wider investor base than you might have with the traditional mutual fund and the greater the pool of prospective investors the greater the liquidity in the ETF the larger that ETF will become. Thus the overall cost of owning that ETF in theory will be driven ever downward because transaction costs will be lower. The greater the investor base the greater the asset base in theory the lower the fees will be on the ETF. And that's a huge benefit to long term investors in those funds.

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Jacob Wolinsky is the founder of, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at) - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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