From: beliavsky@aol.com
Newsgroups: misc.invest.financial-plan
Subject: Re: holding investments for 1 yr / ETF's
Date: 21 Sep 2005 18:40:01 GMT
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Rich Carreiro wrote:
> Tad Borek  writes:
>
> > So that type of manager might park the $4M in an ETF that tracks the
> > broad US Stock Market.
>
> Do they really do that?  Wouldn't they instead "securitize" the cash
> by buying SP500 (or whatever) index futures?

Even some institutional money managers are not set up to trade futures
or are uncomfortable with them. If one's desired ultimate portfolio
will resemble the index, one can buy the ETF, later "crack" it to get
the shares, and then trade to get the desired positions. This may
involve lower transaction costs than obtaining the desired positions
from scratch, especially for a small cap ETF. OTOH, maybe the same
strategy can be pursued with futures using the "exchange for physicals"
(EFP) market.