Some ETFs deliver more than the return of their underlying index, even after fees are taken into account, writes Tom Lydon of ETFTrends.com. Where does the extra cash come from? ETFs can lend out as much as 33 percent of their equity holdings to another party—such as a short seller—for a price, Lydon writes. “In some instances, demand for securities found in an ETF’s underlying portfolio are so high that revenue generated from lending fees may exceed the fund’s expense ratio." ETF investors benefit from this increased securities lending as the generated fees help push returns above those of the underlying indices, Lydon writes. Small-cap stocks, in particular, are in high demand. As an example, Lydon points to the iShares Russell 2000 ETF (NYSEArca: IWM), with an expense ratio of 20 basis points, and SPDR Russell 2000 ETF (NYSEArca: TWOK), with an expense ratio of 12 basis points. These funds outperformed the index by 21 and 7 basis points, respectively.
Are You Given Too Much Credit?
Edward Gjertsen II, the chair of the Financial Planning Association, says advisors are given too much credit for positive market performance and, at the same time, inappropriately blamed for negative market performance. “A financial planner has no control over the markets,” he told the Chicago Tribune. “The only thing we can control is the financial plan and the amount of risk for a client. If you go to a financial planner and all they want to talk about are your investments, they are giving you investment advice and not financial advice.”
Only four out of 10 Americans report they’re making good or excellent progress in meeting their retirement savings goals. But the struggle looms larger for women, according to the Consumer Federation of America, who surveyed over 1,000 U.S. adults at the end of January. The survey, which is part of the annual America Saves Week, found that just over a third of women rated their savings progress “good” or “excellent.” That’s compared to 44 percent of men. Additionally, only 45 percent of women reported putting at least 5 percent of their income into savings, compared to 54 percent of men. “The fact that men have larger incomes and financial assets than women makes it easier for them to save,” said Stephen Brobeck, executive director of CFA.
TIAA-CREF is no more, replaced simply by TIAA. The financial planning company (Teachers Insurance and Annuity Association of America), created nearly 100 years ago as a means for building a sustainable retirement system for teachers, dropped the CREF (College Retirement Equities Fund) from its moniker as a way to simplify its brand, according to Adweek. The branding includes the shortened name, new logo and revamped website. “This is a new way to engage with millions of people to help them along on their journey,” TIAA Chief Marketing Officer Connie Weaver said. “Many people are intimidated by the investment portion of financial services. You have to meet people where they are; they care about their problems, and they don’t want someone to tell them about diversification. If they don’t understand what that is, that makes people feel bad, and they shut down.”
