Advantages of Trading Life-Cycle ETFs : NobleTrading Blog

Monday, May 11, 2009

Advantages of Trading Life-Cycle ETFs

Both Life-cycle ETFs and mutual funds are getting now popular among investors, especially those planning for their retirement. Life-cycle exchange traded funds holds many advantages over life-cycle mutual funds and other retirement investment schemes.

Advantages of Trading Life-Cycle ETFs

Life-cycle ETFs are single solution for most of your retirement requirements.
They combine the best aspects of aggressive and conservative trading strategies; and keep those in balance.
Life-cycle ETFs are low-cost investment vehicles, than most other financial products including mutual funds.
They themselves are diversified trading instruments which are designed to reduce overall portfolio risks.
Life-cycle ETFs offer increased flexibility than most other retirement schemes; you can buy, hold and sell them whenever you want. More over one can choose the most suitable ETF for his retirement goals.

Disadvantages of Trading Life-Cycle ETFs

Buy and sell activities include commissions charged by brokerage firms. Thus they are less suitable for dollar cost averaging and similar short-term periodic trading activities.
They are less suitable for already diversified portfolios. They are better when one invest most of his portfolio money to one retirement fund.
They are not suitable for traders looking for periodic returns from market and for those want to earn their livelihood from their investments.
They are new instruments and there is no sufficient performance history. Also they greatly differ in their asset allocation strategies.