Why ETFs?

Performance of Hedge Funds

iSectors® offers several asset allocations, including Post-MPT Growth and our Liquid Alternatives Allocation, that have historically exhibited hedge fund-like risk and return characteristics.

iSectors models are more investor-friendly than hedge funds in the following ways:

  • Available to all investors (no accredited investor standard)
  • Low minimum investments (from $25,000 – $100,000, depending on the strategy)
  • Daily liquidity (even intraday liquidity)
  • Transparency with respect to securities holdings
  • Separately Managed Accounts (held in client’s own name)
  • 1099 tax reporting (no late K-1s or other tax issues!)

In addition to the Post-MPT and Liquid Alternatives allocations, iSectors offers additional strategy solutions, including: Domestic, Global, Endowment, and Tactical Global Balanced.

The Diversification of Mutual Funds

Exchange traded funds (ETFs) are a diversified portfolio, or basket of individual securities similar to mutual funds. There are ETFs that hold portfolios of nearly every major asset class, including major stock and bond sector indexes, industries, foreign countries, currencies, precious metals, real estate, and many others. Thus, with the purchase of one ETF, an investor obtains a diversified portfolio of securities in the particular asset class the ETF has been designed to track.

However, ETFs do have several advantages over mutual funds because of their unique structure. For example, they are bought and sold on stock exchanges (just like individual stocks) at any time throughout the day. The unique structure of ETFs may also offer the following advantages over mutual funds:

  • lower expense ratios
  • lower tax liabilities
  • increased transparency

iSectors offers investors complete, properly allocated and diversified, ETF-based portfolios. All iSectors investment portfolios use ETFs as the primary vehicle with which to execute the desired asset allocation strategy.

Low Expenses of Exchange Traded Funds

Why is it so important to keep expenses low by using exchange traded funds (ETFs)? Investing in low-cost index ETFs, versus higher cost mutual funds, is like a horse race in which you put a 100-pound jockey on your horse and the other competitors put 300-pound jockeys on their horses. This lighter jockey is going to give you a significant competitive advantage in this competitive world of horse racing. Low cost ETFs, as a part of your investment strategy, are going to give you a competitive advantage in the results of your portfolio.

For more information on the costs involved in mutual fund investing, go to www.personalfund.com.