Passive investing: ETF vs Mutual Funds. Do we have a new winner? (Data backed research)

[sayjay9274]

@gracedaily No but in general your capital gains tax is lower with ETFs vs MFs.

 

[cordlessvacuumcleaner]

@gracedaily No, and @sayjay9274 is categorically wrong about ETFs being superior in taxation than mutual funds.

 

[luca]

@shammysdad ETF is not a good hedge against market lows

 

[shammysdad]

@luca Why is that?

 

[lostandconfused2]

@luca Do you have any data for this claim or this is just a feeling you have?

 

[resjudicata]

@shammysdad

Tracking error includes TER.

False!!!

Tracking Error is a resultant effect - it is defined as the standard deviation of your excess returns vs benchmark.
Tracking Error just measures how volatile your excess returns will be.

Hypothetically, if I have a fund that always returns exactly 2% less than MSCI World, then its Tracking Error would be 0.

Extending this (and with a crude approximation), if the TER is constant over time, then one can say it's marginal contribution to tracking error is 0.

To say it includes the TER is wrong. You are adding a first moment term to a second moment term.

 

[zashmaster]

@resjudicata The OP added the tracking error and the TER to what they called 'annual costs'. That is incorrect. Published numbers of funds are after TER has been deducted.