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  • Writer's pictureJohn J. Diak, CFP®

Article Feature: The ETF categories intriguing advisers


The ETF market is crowded, and advisers are looking for products that either fall into particular niches, or are low-cost core holdings. Either way, sponsors are working hard behind the scenes to differentiate their products. Those that do are seeing inflows.

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‘IT COMES DOWN TO FEES’

There’s a good chance the large-cap index fund will be a Schwab ETF. “Quite honestly, it comes down to fees,” says Diak. “They are below all of their major competitors on cost. It aligns perfectly with us.”

Schwab is one of Oatley & Diak’s custodians, but the RIA spent a year or two evaluating Schwab ETFs after they were launched. “I’ve been impressed,” says Diak, who calls the Schwab lineup “pretty meat and potatoes.”

He is not the only adviser who considers cost when looking at core holdings. “We run all-ETF model portfolios,” says Nate Geraci, whose Overland Park, Kansas-based firm is appropriately named The ETF Store.

“We consider every ETF that’s out there,” he adds.

“We favor market-cap-weighted, low-cost ETFs,” says Geraci, a predilection that often leads him to include Schwab products in client portfolios. “Schwab ETFs are a very compelling option for core, broad-based exposure,” he says.

Schwab is one of two custodians The ETF Store uses for client holdings. Geraci notes that customers who use Schwab as a custodian can trade the firm’s ETFs commission- free.

“The trading platform can almost serve as a tie-breaker when you are looking at the different broad-based ETFs that are out there,” he adds.

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