ETFs are also more volatile than their best -
fitting index mutual fund, but have similar covariances.
Not exact matches
Vanguard is known for their low costs
mutual funds, and have a variety of
index funds to
fit just about any need.
But, when those same
mutual funds were compared to the
index that
fit them the best, the majority (Clements doesn't give a specific number) lagged the
index.
Since I'm a big believer in keeping costs low (for my thoughts on the issue, see How High
Mutual Fund Fees Can Cost You Millions (Another Reason You Should Love
Index Funds)-RRB-, this chapter was a natural
fit.
What you're supposed to do is determine a mix of viable asset classes that
fits an individual investor's life, and then either fund it with something very diversified like
mutual funds, ETFs, or
index funds (the CFA program likes
index funds, as most advisers can't even pick open - ended
mutual funds, or ETFs, well enough to beat an
index fund).