Are ETFs “Weapons of Mass Destruction”?


This week’s AAII Weekly Digest highlights these “must-read” AAII articles:


A Worksheet Approach to Selecting a Financial PlannerA Worksheet Approach to Selecting a Financial Planner

Most individuals interview potential financial advisers before making a final selection to help them determine whether they are making the right choice. But what questions should you ask? The purpose of this article is to give you two worksheets that may help you ask the right questions.

Using Annuities for Long-Term Health Care

Stan Haithcock

Because we are all living longer, today’s investor is definitely concerned with end-of-life issues and making sure that enough coverage is in place as Father Time starts to take over. Annuities are primarily used for lifetime income needs, but some annuity strategies can provide efficient transfer of risk coverage for confinement-type care. Here’s a discussion of some current health care risk-transfer strategies using annuities.


Achieving Financial Security by Conquering Personal DebtAchieving Financial Security by Conquering Personal Debt

Overloading on debt is expensive. In addition, credit can be an important lifeline in the event of a crisis, and if you have used all your credit, you have removed a valuable cushion of security. Debt is a major hindrance to achieving financial security for many Americans. Here are some tips on how to conquer debt.


Assessing Your Life Insurer’s Financial Performance

Cash-value life insurance (e.g., whole life, universal life, etc.) can be a terrific product, providing both financial security and attractive investment returns. However, when it comes to the life insurance industry’s products, finding reliable information, analysis and expertise (not to overlook mentioning quality policies) can be more than just a little bit difficult. Typically, those who are buying or renewing a cash-value life insurance policy use policy illustrations as well as financial ratings agency rankings and summaries. Unfortunately, not only do those approaches create serious problems, but the problems are seldom recognized or understood.

Our Member Question for this week is:

Do you already have, or do you intend to have, a formal estate plan?


Vote to answer this week’s Special Question:

If you have an estate plan, what were your primary reasons for creating one?

Last Week’s Results:

A recent Bloomberg article quotes the managers of the FPA Capital Fund as saying that exchange-traded funds are “weapons of mass destruction” that have removed the consideration of underlying company fundamentals and valuation and have created the potential for a market sell-off. Do you agree with their assessment?

Poll results are as of 9 a.m. (Central) on Monday. 1,655 respondents.

Are ETFs “Weapons of Mass Destruction”?

A recent article quoted managers of the FPA Capital Fund as saying that exchange-traded funds (ETFs) are “weapons of mass destruction” for the market, as they distort stock prices and the size of the ETF market has created the potential for a market selloff. We polled our readers as to whether they agree with this sentiment. In addition, we asked our readers to state their preferences for closed-end funds or ETFs, and why they choose one or the other.


A Lifetime Investment Strategy

Authored by the chairman and founder of AAII, this valuable publication shows you how you can outperform professional money managers and the market over the long run. In addition, it will help you understand risk and its relationship to return. It’s not available in bookstores, but is one of the many benefits of being an AAII member.

The AAII Weekly Digest is one of the many benefits of AAII membership. To learn more, consider a risk-free 30-day Trial AAII Membership to start becoming an effective manager of your own assets.


Leave a Reply

Your email address will not be published. Required fields are marked *