Many ETFs Missed Benchmarks In '09

Index ETFs promise how they will strive to track indexes on a DAILY basis, not long-term periods. To insist or expect them to do otherwise is unreasonable, misleading and inappropriate to educating advisors how to use them.Compounding alone explains the missing of "preferred" but "inappropriate" demands for bogus tracking expectations.First, we should keep in mind that it would only be fair to remind advisors that traditional S&P 500 and other index funds have been compounding their investors' returns AGAINST them for much of the past decade without any obvious and well-earned negative outcry from the financial Press.Second, if you have a specific target date for a specific higher or lower value on the underlying index you are more likely to attain your goal by selling the index or inverse index ETF short than by holding it. It may cost a bit but that is the price of reaching your goals. Sorry, this will not work in tax-deferred accounts which prohibit margin accounts.Third, if you wish to achieve the desired result of a leveraged ETF, there are rebalancing strategies for increasing your odds of success.Fourth, advisors would be well-advised to read the prospectuses and attend some excellent webinars on the subject, often an hour well-spent.Finally, I hope you have reached the conclusion that managing a portfolio of ETFs is a task for a seasoned sector rotation portfolio manager and not a simple substitute for a static asset allocation plan.In a tax-deferred environment there are no income tax consequences to proactive portfolio management; there are retirement consequences to trying to make ETFs do something they are not intended to do.Thanks in advance for reading this note closely.