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Rick Ferri, Portfolio Solutions founder, on why he compares ETFs to “throwing Jell-o at a wall,” and how he chooses which ETFs to invest in.
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My next guest compares the ETF market to throwing -- -- at a wal -- As you'll know at home -- now but he hasn't investing advice to make your portfolio less generally Rick very portfolio solutions now.
Join me on Fox Business those -- from San Antonio Texas I don't know if you had a TV's greeted front heavy Rick believe -- a lot about what the jello joke today but you're serious.
You say Howard anymore ETS on the table -- like -- -- and waste of money why do you say that.
Well IE TF market has really expanded in the last twenty years particularly in the last ten -- isn't.
Companies started launching multiple ETFs dozens at a time back in the nineteen late 1990s.
-- started that with about thirty ETS.
-- 1999.
But it it worked well because they all stock because there were no ETFs really on the market at the time that cover those asset classes.
But now we've got almost 14100.
Different over 14100 different exchange traded products out there.
And lot of redundancy.
So they -- wall is saturated.
And all the product revenue jello being thrown -- -- is sliding off.
We've seen a lot of closures are closures by the dozens now.
Now what's this I -- you know 1411516100.
Trumping a -- -- about but at least 68 of those that close so far this year -- -- where -- -- -- -- names and sorry that.
Kind of caught my attention because I know -- was very well -- they're shutting down ETS advisor shares direct say on daily.
-- they've got to basically tells me all of these examples of those that are kind of they have been in trouble -- and troubles some hot how to differentiate between NE TF that's.
Maybe on the blacklist -- one that's that's a viable investment opportunity.
How well that is actually a nice website you can -- to us out of website that is a -- which you can look at the ATF's -- -- may not actually.
Survive.
And it's -- ETF the death watch effectively type that in to any Internet browser ET after death watch.
Article completely W -- our viewers I'm sorry but I stuck -- to -- -- you know that's right saw some of these news of this death watch figure talking about -- content get greater effect.
I'm so here's the problem if about mutual ETF has been out for more than six months and hasn't gathered 25 million in assets.
The trading volume is -- the probability that fund is going to close over the next one or two or three years is is very high.
So the if you going to buy NE TF the first thing you should do is see if it's on the death watch and if it is true.
And -- you got -- -- a very short period of time which is not how I invest money I'm a very long term holder.
I -- I wouldn't buy NE TF unless it has a hundred million in assets has been put out -- by a good company and has been around for a long time.
That's that's the criteria you should use if you're -- buy and hold investor like Diane.
Evidence -- -- when -- a look at some of the names of these -- as global opportunities its brick wall I mean you know I think it's hard for the viewer to kind of in the a lot of -- not -- that can mess yet now what makes a really good ETF I mean you say it's got at least the opening here cracked.
Well I'm I'm -- John Bogle.
-- animal mobile had so in my view of a very good ETF is one that's widely diversified.
Has extremely low cost.
Trade with great volume and covers a broad asset class so I'm I don't going for the niche market ETF because I'm not a trader.
I'm I'm all for the broad.
Based ETF now that thinks that even vanguard has put -- a lot of ETFs in the last few years that probably some of them will fail.
Because they've tried to cover multiple asset classes from multiple index providers.
And I don't really think there's a strategy here that vanguard has I mean their original ETFs they came out with are doing great but some of the other ones you'll probably see fold in the next -- -- Okay but -- -- recommend the vanguard total stock market ATF and I think a lot of people on the elements are pretty popular.
Name out there are Rick Perry portfolio solutions founder author of the ETF book.
There's the title of the book thank you very much us.
