Wed03042015

News

Council considers freezing First St. development

Council considers freezing First St. development


Megan V. Winslow/Town Crier
A pedestrian walks along First Street in downtown Los Altos last week. Future construction on the street could soon be barred by an emergency moratorium on development.

Further construction along First Street could be t...

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Schools

Santa Rita students put on Kranky Kids Radio Show

Santa Rita students put on Kranky Kids Radio Show


Traci Newell/ Town Crier
Neighborhood volunteer Lishka DeVoss, center, introduces members of Santa Rita School’s Kranky Kids Radio Club to their interviewee last week. The students star in the Kranky Kids Radio Show, which airs Fridays on KZSU.
...

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Community

Music for Minors partners with Harvard to expand efforts

Music for Minors partners with Harvard to expand efforts


Palmer

When the thriving Music for Minors began to outgrow its capacity, the local nonprofit organization made new friends.

Beginning in late February, Music for Minors – a Town Crier Holiday Fund recipient – partnered with Harvard Business Sch...

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Sports

Eagles rally past Rams

Eagles rally past Rams


Megan V. Winslow/Town Crier
Los Altos High’s Patrick McColl scores on a breakaway dunk Saturday against Willow Glen.

Patrick McColl’s breakaway dunk emphatically ensured Los Altos High’s greatest comeback win of the season, 45-37 over Willow...

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Comment

Dangerous streets: A Piece of My Mind

I’m driving along El Monte Avenue between Foothill Expressway and Springer Road at approximately 6 p.m. on a midwinter evening. In keeping with the “village feeling” of our town, there are no sidewalks and no streetlights.

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Special Sections

Lions, lambs and Cab Franc for March

Lions, lambs and Cab Franc for March


Christine Moore/Special to the Town Crier
Oven fries, a slice of feta cheese and the bite of harissa mayonnaise make for a late-winter, early-spring dinner perfectly paired with Cabernet Franc.

I can’t help but wonder whether March will come in ...

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Business

Los Altos scientist named Inventor of the Year

Los Altos scientist named Inventor of the Year

Alicia Castro/Town Crier
Robert Showen, above, the Silicon Valley Intellectual Property Lawyers Association’s Inventor of the Year, began researching his ShotSpotter technology in his Los Altos home. Sensors are placed around a city, below, and fou...

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Books

French novel

French novel "Hunting and Gathering" offers character-driven suspense


Anna Gavalda is a well-known author in her native France, where she has published six books, most of which have met with considerable praise and commercial success. Her fourth novel, “Hunting and Gathering” (Riverhead Books, 2007), is filled ...

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People

JACK JOSEPH CRANE

JACK JOSEPH CRANE

Long time Los Altos resident, Jack Joseph Crane, loving husband and devoted father of two children, passed away peacefully at the Terraces in Los Altos, Saturday, February 21, 2015. He was 95 years of age. Jack was born on June 22, 1919. He is prec...

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Travel

Seoul of the city: Korean capital offers mix of old and new

Seoul of the city: Korean capital offers mix of old and new


Ramya Krishna/Special to the Town Crier
Seoul’s Cheonggyecheon public recreation space, above, features an elevated pedestrian bridge.

Seoul, South Korea, is a study in contrasts. Having grown quickly, the city is a mix of old and new.

Using...

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Stepping Out

TheatreWorks jumps into ‘Lake’

TheatreWorks jumps into ‘Lake’


Kevin Berne/Special to the Town Crier
Jason Bowen, from left, Adam Poss and Nilanjana Bose star in “The Lake Effect,” opening this weekend at the Lucie Stern Theatre in Palo Alto and running through March 29.

The TheatreWorks production ...

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Spiritual Life

Is your thought life sabotaging your spiritual journey?

My computer started having problems – there seemed to be some sort of malware running in the background. At first it was just annoying, then it began to slow down my computer, interfering with its basic operations. What is it doing? Why can...

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Magazine

Local events serve up family fun

Local events serve up family fun


Courtesy of Peninsula Youth Theatre
Peninsula Youth Theatre’s production of “Pecos Bill: A Tall Tale” is slated to open March 20 in Mountain View.

For families seeking a break from the daily routine, events abound this month and next in Los Alto...

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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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