Category Archives: etf

E*Trade further blurs lines between full-service and DIY investing

Full(er) Service and DIY Investing: Investor Fork in the Road

There is no doubt we are witnessing a wholesale exodus of assets out of full-service brokers like Merrill Lynch and Smith Barney. These assets seem to be finding two very different types of homes:

  1. boutique investment advisory houses: Built by brokers/advisors who themselves have defected from the large wirehouses, these firms take service and advice very seriously. In some sense, they’re a further move into full-service. They are competing head-on with traditional brokerages by upping the ante on technology, service and investment advice.  Investors who feel slighted by their advisor and want the extra hand-holding find this model really attractive.  It’s interesting to note that many of these firms are being founded/built by traditional brokers evolving to this model.
  2. online brokerages: Firms like E*Trade and Ameritrade are taking the bulk of this business.  In the wake of the financial tsunami, some investors are looking to take back investment decisions and don’t want to pay someone else for underperformance.  Proof of this is in capital flowing to online brokerages.  E*Trade reported that it had net new accounts of almost 30,000 in the first quarter of 2009 with $3.5 billion in net new customer assets.

I’ve written about the emergent trend towards high end investment advisors and how traditional stock brokers are resurrecting themselves and building smaller, nimbler firms with their billion-dollar books of business.  I’ve spent less time discussing how online brokers are luring assets.

Online Advisoretrade_onlineadvisor

I had the opportunity last night to have a guided demo of a recently-launched E*Trade product, Online Advisor, with E*Trade’s Liat Rorer, VP of Investment Products.  Online Advisor, developed as part of E*Trade’s newly-minted Investor Resource Center, is a nifty little financial planner-in-a-box.

In a quick and easy 4-step process, Online Advisor: Continue reading

Dollar-hedged foreign ETFs on their way

My business partner, Aaron Katsman, frequently asks for audacious things.  When he fires up “wouldn’t it be nice if…”, you generally brace for an interesting idea.  He does a lot of international investing and likes to use ETFs for certain exposure.  I found it interesting when he recently mentioned how he’d like to have dollar-based foreign ETFs — but with the dollar exposure hedged out.

Well, come on down, Aaron.  IndexUniverse.com is reporting that WisdomTree has filed for currency hedged ETFs.  According to the article, “The WisdomTree Currency Hedged DEFA Fund and the WisdomTree Currency Hedged Emerging Markets Fund track indexes that seek to minimize the effects of the changes in the holdings’ local currencies against the dollar”.  The funds do this by incorporating one-month forward currency contracts to try to minimize the effects of currency fluctuations.

A lot of the move in foreign markets up until the recent pullback has been fueled by a weaker dollar and it’s interesting to think about how these currency hedged ETFs might be used in a portfolio, particularly for investors looking to tap into foreign markets without the effects of currency movements.

Roger Nusbaum, onse of my favorite sources on investing in general and ETFs in particular, is pretty juiced about the whole development.