How do you find a cost effective way to break into the ETF market?

A special "Investing in Funds" article published by the Wall Street Journal looks at the three models currently at play within the sector.

There is the approach pioneered by Vanguard [profile] a decade ago involving the offering of existing mutual funds to create economies of scale and keep costs low. The firm has a patent on this method until 2023.

Another approach involves structuring the ETF as a stand-alone fund that resembles a traditional fund. Pimco [profile] used this strategy last year to launch an ETF version of its Total Return fund.

The third idea,often used by State Street, connects the ETF to an existing mutual fund in a so-called master-feeder design. The ETF channels investor dollars into the existing fund and holds only shares in that fund.

Read more in the special Investing in Funds article published by the Wall Street Journal. 

Edited by: Tommy Fernandez


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