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Jim Niedelman:
Hello. We’re here with Brad Fritz of NelsonCorp Wealth Management. Great to see you Brad.
Brad Fritz:
Thank you.
Jim Niedelman:
I guess some of the things making headlines in the finance world these days are ETFs, which I’m not very familiar with. How, can, can you explain what these are and how they’re different from let’s say more traditional investment things like, uh, like mutual funds?
Brad Fritz:
Uh, they are different, but I kind of refer to them as tomato, tomato. They’re very similar, uh, in structure. Um, actually ETFs, aro- came out because of mutual funds. They’re just the newer style. Like everything in our world today, there’s an updated version. Uh, mutual funds go back to the 20s. ETFs go back to the early 90s. Uh, the origination of them were more about transparency and people wanted, uh, quicker access to the markets and that’s one of the things that it offers, but probably tax efficiency is one of the biggest things we like to look at. Uh, behind the scenes, ETFs are more efficient, uh, in the way they handle their gains and the tax ramifications for investors. Um, just everything about them, we like. They’re starting to catch hold, but they got a long way to go yet.
Jim Niedelman:
It sounds like there are certainly advantages to them. Are most investors using them at this point?
Brad Fritz:
Uh, very limited basis. Um, if you look, and I think I have a graphic for this one. Yeah. The overall market of the investment world, mutual funds, and ETFs combined is about 23 million, trillion dollars. Sorry, that’s with a T.
Jim Niedelman:
That’s a lot of money.
Brad Fritz:
Yeah, that’s a lot of money. And as you can see, the piece of pie for ETFs is very small. It’s only about 16% and the, the bulk of those I think probably are more in corporate plans or and/or, uh, employee plans, 401(k)s. The, the, the number of investors that are doing them personally on a daily basis are probably a very, very small percentage of that.
Jim Niedelman:
Certainly a big gap between the two. Do you think that trend will continue over time?
Brad Fritz:
Oh, it’s starting to. We have another graphic that we’ll show here. It’s definitely changed. And you can see the top line here is the number of the, the dollars worth, I should say, the billions of ETFs that are coming into the marketplace. And the bottom line here is the difference, the loss of market share for mutual funds. So this, the gap is, is widening the other way quite a bit, and I, I think this trend will continue for some time. You see a little uptick here. That’s just during this most recent market we’ve had, but the continuation will clearly be the transparency and the efficiency of ETFs in the marketplace.
Jim Niedelman:
So if you have any questions, you can always ask, a, an, advisor like Brad yourself certainly, Brad Fritz with NelsonCorp Wealth Management. Thanks for your time, appreciate you being here.
Brad Fritz:
Thank you so much.
Jim Niedelman:
You can find it online on OurQuadCities.Com.
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