Monday, March 28, 2011

More Shark Jumping?

Just got this in a Financial Advisor magazine email : Scottrade To Launch Low-Cost ETFs

Scottrade is launching a family of low-cost ETFs on Wednesday that are based on Morningstar’s domestic equity indexes, according to the company. The ETFs will be offered to Scottrade account holders, including advisors using Scottrade Advisor Services, with zero commissions, according to the company.

Basically, we have a retail stock broker now offering exclusive ETFs to their customers. First of all, imagine the lack of liquidity, even though Scottrade has more than two million accounts. And what happens if Scottrade goes down in that helicopter their CEO likes to ride in their commercials?

That is too big of a leap of faith to save a small percentage of return.  The ETF mania just took another step closer to the edge.

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