), the largest U.S. company by market value, is once again
setting a standard for innovation, but this time the innovation
isn't coming by way of the iPhone, iPad or Apple TV. Rather the
making the move to an ETF-only retirement plan
for its employees
While the exchange-traded products has grown by leaps and
bounds in recent to almost 1,470 total products with over $1.13
trillion in assets under management at the end of May, ETFs still
are not prominently used in in company-sponsored retirement plans
such as 401(k) plans. That market is still largely dominated by
At the end of 2010, ETF assets in 401(k) plans were scant at
just $5 billion, or 0.2% of total assets, compared to $1.8
trillion, or 58% of 401(k) assets, according to Cerulli
Associates. However, some firms are pushing the ETF/401(k) issue.
For example, ExpertPlan announced that it will add more than 900
ETFs, including those offered by Barclays, Claymore, First Trust,
iShares, Rydex and Wisdomtree,
according to ETF Trends
Charles Schwab (NYSE:
), the eleventh-largest U.S. ETF sponsor, has been working on an
ETF-only 401(k) plan that would use index-based ETFs. Capital
) ING Direct offers index ETFs in its Sharebuilder 401(k) plan,
and T.D. Ameritrade (NYSE:
) also includes ETF options in its 401(k) plan,
ETF Trends noted earlier this year
But the move by Apple, not only the largest, but the most
innovative U.S. company in the eyes of many, to all-ETF
retirement plans stands as the strongest endorsement to date of
the utility of ETFs when it comes to retirement planning.
At the very least, Apple embracing ETFs for employee
retirement plans could motivate other companies to consider the
idea as well. Employees can only hope that's the case because for
now, there's still plenty of asinine information in the
marketplace regarding ETFs and 401(k) plans.
Two so-called experts cited in this piece by
Employee Benefit News
with their comments imply that ETFs are reserved only for highly
sophisticated, active traders.
David Wray, president of the Plan Sponsor Council of America,
said in the Employee Benefit News piece "ETFs are designed to be
traded" and to teach unsophisticated investors about ETFs "is a
Maybe those allegedly novice, unsophisticated investors would
like to know that the
average mutual fund had fees of 0.75% last year,
which is well above the average for ETFs
. All those added fees make a difference over the long-term.
For now, let's just say kudos to Apple for seeing through the
misinformation and for giving their employees the chance to use
ETFs over antiquated mutual funds.
*The opinions expressed here are my own and do not represent
those of Benzinga or any other outlet where this story may be
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subject or just to ask questions. Follow me on Twitter:
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.