Relentless innovation and fierce competition make us happy.

I got some feedback on the Beating On The Runt blog, and not all of it was positive. For example, even our own Don Friedman criticized Matt and me for "nitpicking." I DO think that to a degree we are so immersed in what we do that we often are really working at the margins. But so, too, do I think most of our readership is. By and large, my thinking is that if you know this Web site, and you're reading this, likely you've already concluded that ETFs and index funds are, well, better. So from there it's, "Which ones do I use to implement which investing strategies?"

It's ALWAYS easy to step back and pan the rest of the financial services industry. Because it's a RACKET. The overwhelming majority of investment products are exorbitantly expensive and have an unfortunate tendency to underperform the market. And our guys are performing WITH the market minus (less) cost nearly every time.

And on iShares in particular, it's easy to pick on them. They are so dominant and they do not always move as fast as we'd like on product development or pricing. But one thing you can't deny. From my perspective, they have absolutely revolutionized the investing landscape, and they've brought me better products at ever-more competitive prices both directly and indirectly.

Do you think there would BE a 25 bps emerging market ETF or index fund available to smaller-account investors if it weren't for iShares? Basically iShares directly opened up Admiral-level pricing to investor-share class folks at Vanguard. And with the scale that's come in, we'll continue to see prices come down and fierce competition (though not as fierce as we might like it). Our part of the market - the smart money part of the market - will always gravitate toward quality. So I keep my faith in that. Companies will maximize their revenues. Competition is what keeps things honest, even at the low-cost end of the spectrum.

One other thing on this ... I got an email from a friend who pointed out something Matt and I did not address in our blogs from yesterday. That is, that in addition to the other things we talked about (familiarity, first mover momentum, etc.) a reason people don't pour their assets from one product to another, even if it's better, is the massive tax hit you may have to take. And if you've been in EEM for 3 or 4 years, you are sitting on some SERIOUS gains. I'm sure you've all run into that before, particularly in counseling your family members on how to get out of various disastrous mutual funds they are invested in.

Finally, on Matt's point about the EM access. This is another funny one. After searching long and hard, we put our company retirement plan with Fidelity. Yes, that indexing titan, FIDELITY. It was a clear-cut decision. In talking with the Vanguard folks about fees, even they said, "yes, we agree with you." And you've got to do what's best for your people. And with the limited activity in our accounts and the kind of investors we are (we're going to give recommendations for the most intelligent approaches to our employees), I guarantee you that Fidelity will make money off of us.

I still hold out hope of Vanguard doing a better job on some of its fees and particularly for its smaller investors. And Fidelity taking BIG index assets and the plans of even index-focused publications may be a way to urge that on. ETFs chipping into the retirement space would be a boon, because, like Matt said, we can do it, but it's expensive and not very practical in our plan. But there I am, nitpicking again.

I honestly do feel like we've never had it so good as investors. So go out there and make all the right choices, being as diversified and cheap as possible, with the satisfied knowledge that you and your children will be keeping more of your hard-earned investments more than at any time in the past. Thank you index and ETF business. Keep fighting each other into our pocketbooks.

By the way, I'm off tomorrow for my (40^th!) birthday (company policy gives us our birthdays off) so this will be my blog through the weekend.