TY - JOUR T1 - Managing Costs and Risks with ETF Tools JF - ETFs and Indexing SP - 14 LP - 25 VL - 2003 IS - 1 AU - Matthew T. Moran Y1 - 2003/09/21 UR - http://guides.pm-research.com/content/2003/1/14.abstract N2 - Investors have increased their focus on management of investment risks and costs as the S&P 500 Index experienced a recent three-year fall of more than 43%. Exchange-traded funds and ETF options can help investors diversify and lessen investment risks and costs. Evidence is presented to show that: 1) many active managers actually underperformed indexes during the recent bear market (contrary to some expectations), 2) most low-cost mutual funds outperformed high-cost funds, 3) ETFs can help diversify portfolios for investors who have single-stock concentration risk, 4) ETFs generally have lower expense ratios than comparable mutual funds, and some mutual fund customers are subject to loads and other fees, while commissions often are charged to individual investors for ETF trades but not for no-load funds, 5) ETFs generally are more tax-efficient than mutual funds, and 6) investors might wish to consider hedging with ETF tools. ER -