Farewell, Mutual Funds: The Pushback

Not everyone believes that ETFs will become more popular than mutual funds

John Rekenthaler, CFA 26 January, 2021 | 8:24AM

Bye in Various Languages

Reader Responses
Friday’s “Farewell, Mutual Funds” was controversial. It made an aggressive claim: that eventually, exchange-traded funds, or ETFs, would replace mutual funds as the public’s (and institutions’) favourite investment. Swing hard, expect resistance.

Those who disagreed offered four counterarguments:

  1. My terminology was wrong.
  2. ETFs have operational defects.
  3. For some uses, ETFs are unsuitable.
  4. Even if ETFs were superior, mutual fund investors have reasons to stay put.

Fair enough. I will address those rebuttals.

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About Author

John Rekenthaler, CFA  John Rekenthaler is Vice President of Research for Morningstar.

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