We sometimes are asked why we might use a mutual fund rather than an ETF in the portfolios we build for our clients and why we are willing to pay a trading fee to buy that fund when an ETF can be bought for free? There is actually a process for how we arrive at that important decision. That process starts with the mix of investments we use to create a portfolio. Since the industry likes to use pie charts to help clients visualize their portfolios, I am going to use the analogy of baking a pie to help explain why we use certain investments. The finished pie is your portfolio, the recipe is the model we follow, and the ingredients are the various investments. The ingredients we use to build a portfolio are called asset classes. A sample of some of these asset classes are: Large and small company stocks, Growth...
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