Wed09022015

News

West Nile fogging commences today

West Nile fogging commences today


Courtesy of the Santa Clara County Vector Control District
Fogging commences Wednesday within the highlighted area.

The detection of West Nile Virus-infected mosquitos means that Santa Clara County officials will begin mosquito fogging operations...

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Schools

LASD trustees reopen negotiations with Los Altos Teachers Association

The Los Altos School District Board of Trustees last week directed staff to reopen negotiations with the Los Altos Teachers Association, a move intended to shore up the district’s financial picture.

According to the district’s current co...

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Community

LA teenager crowned Miss Golden State, advances to national pageant in Florida

LA teenager crowned Miss Golden State, advances to national pageant in Florida


Alicia Castro/Town Crier
Alexandra McCarthy, crowned Miss Golden State Teen in July, earned “Ms. Personality” honors from her peers.

Alexandra McCarthy has a ways to go before reaching her coveted role as a U.S. Supreme Court justice. Bu...

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Sports

After rough year, Eagles aim to soar once more

After rough year, Eagles aim to soar once more


Megan V. Winslow/Town Crier
Los Altos High senior running back Patrick Vargas snares a pass in practice last week.

Don’t dismiss the Eagles. Coach Trevor Pruitt is adamant that his Los Altos High football team will be better than expected.

&#...

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Comment

Car spotting 2015: A Piece of My Mind

When I was a kid, September was exciting, almost like Christmas, because that was when the Big Three automakers would reveal the new models for the upcoming year.

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Special Sections

Loving on the Edge

Loving on the Edge


Courtesy of Ford
The Ford Edge has been redesigned for 2015. Ford lengthened the wheel base and added cargo space, among other things. The Titanium model sells for approximately $42,000.

Once in a while, a vehicle we test-drive is just right for our...

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Business

Wine bar aims for October opening

Wine bar aims for October opening


Rendering courtesy of Honcho
Honcho, the wine and beer lounge on First Street, expects an October launch. A rendering of the space reveals the interior layout, which includes bar and lounge-style seating.

A downtown libations lounge that anticip...

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People

LOIS CAROLINE WALLES

LOIS CAROLINE WALLES

November, 1928

Lois lost a long and courageous battle with a prolonged illness on July 14th, 2015. She passed away knowing how well she was loved. She was always the life of the party and loved bringing everyone to her home for dinner or an event,...

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Travel

Carmel Valley Ranch unveils upgrades

Carmel Valley Ranch unveils upgrades


Courtesy of Carmel Valley Ranch
Carmel Valley Ranch recently upgraded its Vineyard Oak suites, which feature sweeping views, rocking chairs and private outdoor tubs for soaking under the stars.

Things are heating up at Carmel Valley Ranch, with 30 n...

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Stepping Out

'Dead Man' comes alive at Bus Barn

'Dead Man' comes alive at Bus Barn


Richard Mayer/Special to the Town Crier
The cast of Los Altos Stage Company’s “Dead Man’s Cell Phone” includes, from left, Marjorie Hazeltine (as Hermia), Kristin Walter (Jean) and Adrienne Walters (Carlotta).

Los Altos Stage Company opens its ...

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Spiritual Life

Inside Mountain View

MV actress/playwright Garvin wins NY festival award for

MV actress/playwright Garvin wins NY festival award for "Corners Grove"


Courtesy of Undiscovered Countries
Kaela Mei-Shing Garvin received a New York arts festival award for a featured role in “Corners Grove,” a play she wrote.

New York recognized that one of Mountain View’s own can “make it there” when the Planet C...

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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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