Thu12182014

News

Council seeks more options for community center

Council seeks more options for community center


Town Crier File Photo
The Los Altos City Council approved an appropriation to examine options for a new community center to replace the aging Hillview facility.

The Los Altos City Council last week voted narrowly in favor of examining further opti...

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Schools

Local schools participate in  national Hour of Code activities

Local schools participate in national Hour of Code activities


Ellie Van HOutte/Town Crier
Himan Shu Raj, a volunteer from Microsoft, advises Los Altos High ninth-graders, from left, Serhat Suzer, Jamie Bennett and Chris Yang as they participate in the school’s Hour of Code Showcase.

Local schools participa...

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Community

Rotary marks 25th anniversary of AIDS project

Rotary marks 25th anniversary of AIDS project


John Hammerschmidt/Special to the Town Crier
Celebrating the anniversary of the Los Altos Rotary AIDS Project are, from left, front row: Greg Hoblit, Dude Angius, Mary Prochnow and Robin Young. Back: Greg Betts, Joe Renati, Roy Lave, Bob Berka, Dic...

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Sports

Pinewood poised for another title run

Pinewood poised for another title run


Ellie Van Houtte/Town Crier
Pinewood’s girls basketball team is receiving contributions from several new players, including freshman Stella Kailahi, above.

Complacency shouldn’t be a problem for the defending Division V state champion Pinewood S...

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Comment

Letters to the Editor

Ticket motorists for U-turns on Main Street

As I was walking downtown on Main Street recently, something came to me out of the blue. The town of Los Altos is missing out on a huge revenue stream. I realized that if all the cars – there were th...

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Special Sections

Looking Ahead

Looking Ahead


s in line to be mayor of Mountain View in 2015.

Mountain View anticipates the following changes in 2015:

• Beginning Jan. 1, Mountain View City Councilmembers will receive a raise to $1,000 per month as a result of the passage of Measure A in...

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Business

Your 2015 stock market game plan

It’s been a maddening month because of oil and gas, especially in stocks and bonds. Then, consumer spending pushed stocks higher Thursday, easing investors’ jitters about the global economy and prompting them to consider how to invest in ...

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Books

Gawande's

Gawande's "Being Mortal" proves an important book on aging


Books about death and dying are usually not on my list of “must reads.”

I couldn’t resist, however, the best-selling “Being Mortal: Medicine and What Matters in the End” (Metropolitan Books, 2014) by Atul Gawande.

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People

SANGEETA SACHDEVA

SANGEETA SACHDEVA

Sangeeta Sachdeva, 55, wife of Subhash Sachdeva and mother to Natasha and Tanya, died at 8:54pm, Sunday, December 7, 2014 from respiratory failure.

Sangeeta was born on October 18, 1959 in Delhi, India. She was born to Moti Sagar and Raj Kapoor an...

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Travel

South Tahoe renovations enhance off-mountain seasonal fun

As any enthusiast knows well, there is more to the enjoyment of winter sports than skiing or snowboarding.

While many winter resorts make minor upgrades each season, the off-mountain attractions and amenities can be as enticing as the activities on ...

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Stepping Out

Aurora Singers to emit 'Musical Glow' Friday

Aurora Singers to emit 'Musical Glow' Friday


courtesy of Aurora Singers
The Aurora Singers are scheduled to perform a seasonal concert Friday night in Palo Alto.

The Aurora Singers’ “Winter’s Musical Glow” holiday concert is set for 7 p.m. Friday at the Unitarian Universalist Church of Pal...

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Spiritual Life

Enter the superhero: Finding the God who loves you

In my life-coaching practice, I see a lot of pain. Much of it stems from fear and guilt, often expressed as low self-esteem, anxiety, a lack of forgiveness both for oneself and others, anger – and so on.

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Magazine

Christmas At Our House home tour celebrates 26 years

Christmas At Our House home tour celebrates 26 years


Courtesy of Christopher Stark
Homes on the St. Francis High School Women’s Club’s Christmas at Our House Holiday Home Tour showcase a variety of architectural styles.

The days grow short on sunshine but long on nostalgia as the holidays approach...

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Examining the choice between mutual funds and ETFs

Following is the first in a two-part series on mutual and exchange-traded funds.

You’re probably familiar with mutual funds. They are arguably the most common type of investment choice for 401(k) and other retirement accounts.

Exchange-traded funds (ETFs), by contrast, have only been around since the early 1990s and have yet to find their way onto many retirement plan menus. But they are widely available for brokerage accounts and since 2008 have experienced explosive growth. You may be wondering what the difference is between the two types of funds and which makes a better investment.

ETFs, like traditional mutual funds, represent a basket of assets such as stocks or bonds. Unlike mutual funds, investors cannot buy ETF shares directly from the investment companies that offer them. Instead, investors must buy ETFs from other investors, just like stocks. That has two implications: (1) You can buy ETFs anytime during the trading day, unlike mutual funds, which can only be purchased at the end of the day after their net asset values have been calculated, and (2) during periods of high demand, the prices of ETFs can exceed the net asset value of their underlying assets.

Because buyers generally do not want to pay more than an ETF is worth, something is needed to keep the price close to the ETF’s net asset value. The solution is to allow certain financial institutions, known as authorized participants, the ability to purchase and redeem blocks of ETF shares, called creation units, directly from the ETF company. This approach gives ETFs an arbitrage mechanism that tends to minimize the potential deviation between the market price and the net asset value of the ETF’s shares.

If there is strong investor demand for an ETF, its share price will (temporarily) rise above its net asset value per share, giving authorized participants an incentive to purchase additional creation units from the ETF and sell the component ETF shares in the open market. The additional supply of ETF shares reduces the market price per share, generally eliminating the premium over net asset value. A similar process applies when there is weak demand for an ETF, and its shares trade at a discount from net asset value.

Creation-unit purchases and redemptions are in kind – meaning that the underlying assets are traded back and forth rather than bought and sold – allowing the authorized participants to swap out low-basis shares for high-basis shares without having to pay tax. As a result, ETF proponents argue that ETFs are more tax efficient than mutual funds, which cannot be traded like that.

Another professed benefit of ETFs is the lower expense ratio – the annual costs fund holders have to pay to the fund companies – compared with mutual funds. While true in the aggregate, this is really due to the fact that the majority of ETFs are passively managed and based on indices created and updated by various other financial institutions. There are numerous examples of mutual funds in certain asset classes that are less expensive than their ETF counterparts.

Craig Israelsen, associate professor at Utah Valley University, recently attempted to quantify the performance difference between mutual funds and ETFs. In part 2 of the series, I’ll share his findings.

Los Altos resident Artie Green is a Certified Financial Planner and principal at Cognizant Wealth Advisors. For more information, call 209-4062 or email This email address is being protected from spambots. You need JavaScript enabled to view it. .

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