Are ETFs the best route to low-cost investing?

ETFs

Nick Blake, head of retail at Vanguard Asset Management, examines the differences between ETFs and traditional index mutual funds.

ETFs continue to gain ground in the UK and the debate over their usefulness continues to rumble on. We believe physical ETFs represent nothing more than a different route to invest in an index. ETFs combine the low cost, broad diversification and low turnover approach of a conventional index mutual fund with the pricing and trading flexibility of a common stock. These attributes have led some to dub ETFs a ‘better invention’ than traditional index mutual funds. ETFs have also received an additional boost from the RDR consultation paper which highlighted the benefits of the products “to t...