Friday, May 18, 2012
The Venture Capital Myth
Many investors believe they are deprived of high returns generated by venture capital funds. They read about the success of Groupon, Linkedin, Facebook and others
Wednesday, May 16, 2012
The Hidden Message in JP Morgan's $2 Billion Loss
Dan Solin Author of the Smartest series of books GET UPDATES FROM Dan Solin Unless you were living under a rock, you are
Tuesday, May 15, 2012
The Ewing Marion Kauffman Foundation Report on Venture Capital Funds: A Cautionary Tale
“We have met the enemy…and he is us.” So begins the 51-page report from the Kauffman Foundation, a $2 billion non-profit with a vision to
Thursday, May 10, 2012
Investor Confidence in UBS May be Misplaced
Here are two stories that appeared in the financial media one day apart. The first story [hyperlink to: http://www.fa-mag.com/component/content/article/7-news/10839.html?Itemid=40], was very good news
Wednesday, May 09, 2012
A Rational Response to Irrational Market Anxiety
Market anxiety is good for everyone except you. The financial media loves and stokes it. Readers and viewers increase in uncertain times. The
Wednesday, May 02, 2012
Mal-location of Capital
I used to play a lot of golf, probably far too much. When my friends would ask for advice, the number one question I would get is
Wednesday, May 02, 2012
Wall Street: the other Las Vegas
About a month ago, I wrote about Nicolas Darvas, a world famous dancer who claimed that he made $2 million in the stock market. This
Tuesday, May 01, 2012
Books of the Doomsday Genre: Read This before You Read One of Them
While we at Index Funds Advisors, Inc. do not dismiss the bleak scenario envisioned by the authors of books such as Aftershock or The Day
Monday, April 30, 2012
What You Can Learn From the Returns of Proprietary Mutual Funds
I am fascinated by the success of the securities industry. They are able to convince you to part with your money by touting their expertise
Sunday, April 29, 2012
The Road to Serfdom
The Road to Serfdom was written by Friedrich von Hayek in 1944. Friedrich von Hayek was a prominent Austrian economist during the twentieth century, and
Saturday, April 28, 2012
The Flawed Premise of 95% of 401(k) Plans
Here's the difference between decisions made by 401(k) plan sponsors and the decisions you make for your individual portfolio: Your lack of investment knowledge will
Wednesday, April 25, 2012
Families That Cheat Investors Together, Stay Together
When I am asked the three most important things investors can do to maximize their retirement income, I provide this list
Sunday, April 22, 2012
It’s Time for the Plundering of Investors to Stop
The first quarter of 2012 was a good one for the markets. According to an insightful blog [hyperlink to: http://www.indexingblog.com/2012/04/22/wheres-the-party/ ] by
Friday, April 20, 2012
Where's the Party?
The surge in stock prices around the world in the first quarter serves as a reminder that predicting market trends can be a frustrating business.
Thursday, April 19, 2012
Exchange-Traded Notes: We Hate to Say We Told You so, but….
Monday, April 09, 2012
The Science and Art of Investing Can Harm Your Returns
In a recent New York Times column, Paul Sullivan commented on a report from Barclays Wealth and Investment Management with the intriguing title of The
Monday, April 02, 2012
Don't Rely on Misleading Benchmarks
If fund families brag about the performance against their peers, But you should insist on knowing how they did against their designated index.
Thursday, March 29, 2012
Betting vs. Investing: What We Can Learn from Mega Millions
Thursday, March 29, 2012
How I made $2,000,000 in the Stock Market
Tuesday, March 27, 2012
You Can Learn From a Quiet Trading Floor
If your image of a trading floor was formed by watching commodities traders huddled together and screaming prices, you would be disappointed.
Thursday, March 22, 2012
Betting vs. Investing: What We Can Learn from March Madness
Betting vs. Investing: What We Can Learn from March Madness
Thursday, March 22, 2012
Greg Smith Missed the Point
I was fascinated by the enormous reaction to the op-ed piece in the New York Times by Greg Smith, a former executive director at Goldman Sachs.
Wednesday, March 21, 2012
Where the Money Grows
Where the Money Grows
Tuesday, March 20, 2012
MF Global and the Meaning of Chutzpah
MF Global and the Meaning of Chutzpah
Tuesday, March 20, 2012
Judge Slams FINRA Arbitration
If you have an account with a retail broker, or are employed by one, you signed an agreement to submit all disputes to mandatory arbitration administered by FINRA.
Thursday, March 15, 2012
5 Facts Your Broker Won't Tell You
Many investors rely on brokers and the media for advice on investments. This is unfortunate, because much of the advice from these sources is wrong.
Wednesday, March 14, 2012
Escaping From the Great Vampire Squid
Wednesday, March 14, 2012
Active vs. Passive: The View from Standard & Poors
Active vs. Passive: The View from Standard & Poors
Wednesday, March 14, 2012
Escaping from the Great Vampire Squid
Escaping from the Great Vampire Squid
Tuesday, March 13, 2012
Manager Picking is a Mug’s Game
The S&P Persistence Scorecard report on the performance of active funds has been issued, and for manager pickers, the results are not so encouraging.
Tuesday, March 13, 2012
An Investor Protection Plan
It is sickening to witness the fleecing of investors. If you are using a retail broker or relying on much of the financial media, you may be a victim.
Tuesday, March 06, 2012
An Open Letter to Jim Beard, Atlanta's CFO
I read an article in the Atlanta Journal-Constitution outlining the your city's three big pension plans for police, firefighters, and other employees.
Tuesday, February 28, 2012
The Greater Fool Theory and Investing
You can run your own calculations for the returns of index portfolios for any time period by using this calculator. Use it to compare the returns of y
Tuesday, February 28, 2012
The Sizzle or the Steak: Exotic Market-Linked CDs
FDIC insured market linked CDs may not be the toxic paper that collateralized debt obligations, subprime mortgages, and credit default swaps have been
Tuesday, February 28, 2012
Can You Pay an Active Manager to Beat the Market for You?
Our experiment will be Warren Buffett and his son, Howard Buffett, who has been designated as the future chairman of the board of Berkshire Hathaway.
Thursday, February 23, 2012
Who Has the Midas Touch?
In regard to gold and its investment merits, however, Buffett has had little to say—at least in the pages of his annual shareholder letter.
Thursday, February 23, 2012
A Stock-Picker's Market?
A reasonable question to ask is just how good of a stock-picker do you need to be to beat the index after covering your costs? See the chart below:
Tuesday, February 21, 2012
A Sane Explanation for Insane Behavior
Previously, I was of the view brokers were just emperors with no clothes, pretending to have a "market beating" skill that doesn't exist.
Sunday, February 19, 2012
A Plan to Prevent Professional Athletes (and you) from Going Broke
Saturday, February 18, 2012
Invest With the Silent Minority
A routine report from Morningstar contains some great advice for investors, if you know how to interpret it. The report notes that passively managed f
Thursday, February 16, 2012
Morningstar's Fund Manager of the Year: A Slippery Slope
Tuesday, February 14, 2012
The End of Wall Street as We Know It—And We Feel Fine
The End of Wall Street as We Know It—And We Feel Fine
Friday, February 10, 2012
David Swensen Advises Index Funds
David Swensen Advises Index Funds
Tuesday, February 07, 2012
Tough Times for American Funds
Tough Times for American Funds
Monday, February 06, 2012
Paradox of Skill
Manager selection is a process that requires analyzing noisy performance data, so it should lean heavily on the notion of statistical significance.
Friday, February 03, 2012
Just How Skilled of a Manager-Picker Do You Need to Be?
Just How Skilled of a Manager-Picker Do You Need to Be?
Thursday, February 02, 2012
Morningstar's Manager of the Year: Luck or Skill?
Morningstar's Manager of the Year: Luck or Skill?
Tuesday, January 31, 2012
The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True
A review of Simon Lack's latest book, The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True, and link to adverse practices of Hedge Funds industry.
Monday, January 30, 2012
Two Contrasting Views of Stock Markets
Saturday, January 28, 2012
Investors Are a Day Late and a Dollar Short
Relying on this, instead of looking at the market and recognizing the current price is a fair price, is the most fundamental error made by investors.
Friday, January 27, 2012
What You Can Learn From Suze Orman’s Mistakes
Republish of Dan Solin's Article on US News.
http://money.usnews.com/money/blogs/On-Retirement/2012/01/26/what-you-can-learn-from-suze-ormans-mistakes
Thursday, January 26, 2012
Dirty Tricks Brokers Use To Get Your Business
Brokers and advisors like to describe their activities in terms indicating the benefits they bestow upon their clients.
Monday, January 23, 2012
What You Can Learn From Suze Orman’s Mistakes
What You Can Learn From Suze Orman’s Mistakes First, she came under fire for endorsing a new prepaid debit card.
Friday, January 20, 2012
The Right Focus Can Improve Your 2012 Returns
The Right Focus Can Improve Your 2012 Returns
By Daniel Solin
Original Posted on US News Money website.
http://money.usnews.com/money/blogs/On-Retirement/2012/01/19/the-right-focus-can-improve-your-2012-returns
Thursday, January 19, 2012
Hedge of Darkness
It's true. Big money can be made from hedge funds. If you run one, that is.
Wednesday, January 18, 2012
Problems with Private Equity Performance
IFA completed an analysis of state retirement pension plans which showed that all of them would have fared better with a portfolio of index funds.
Friday, January 13, 2012
Tilting Towards Small Cap Stocks: Is It Still Worthwhile?
Monday, January 09, 2012
2011 Review: Economy and Markets
Monday, January 09, 2012
2011 winners can make you a 2012 loser
majority of investors will continue to believe brokers have the ability to pick outperforming stocks and actively managed mutual funds
Monday, January 09, 2012
Embrace Uncertainty
Current prices for stocks and bonds are fair. They are determined by millions of willing buyers and sellers who are informed about news and forecasts.
Thursday, January 05, 2012
Two and Twenty: So how’s that working for you? The Underperformance of Hedge Funds
Wednesday, January 04, 2012
Einstein's theory....of investing
As legend has it, when Einstein died, he met two men and a woman outside the pearly gates. Always one to strike up a conversation, he about their IQs.
Tuesday, January 03, 2012
2011: The Year in Review
2011: The Year in Review
Wednesday, December 21, 2011
Stemming the Tide
"Those who advocate research on embryonic stem cells in the hope of achieving such a result make the grave mistake of denying the inalienable..."
Tuesday, December 20, 2011
Reaching for Yield: Preferred Stock
In this continuing series we look at preferred stock, a special equity security that has properties of both equity and debt instruments.
Sunday, December 11, 2011
Reaching for Yield: High-Yield Mortgage REITs
Reaching for Yield: High-Yield Mortgage REITs
Sunday, December 11, 2011
Hedge Funds on Edge
Hedge Funds on Edge
Wednesday, December 07, 2011
International Diversification: Is It Still Worthwhile?
International Diversification: Is It Still Worthwhile?
Tuesday, December 06, 2011
Reaching for Yield: High-Dividend Stocks
Reaching for Yield: High-Dividend Stocks
Thursday, December 01, 2011
Is There a Manager Risk Premium?
Is There a Manager Risk Premium?
Monday, November 28, 2011
What Does a Winning Streak Tell Us?
Bill Miller's departure from the Legg Mason Capital Management Value Trust adds a chapter to the debate regarding the value of active stock selection.
Tuesday, November 22, 2011
Index Funds Advisors, Inc’s Concerns with Muni Bonds
Index Funds Advisors, Inc’s Concerns with Muni Bonds
Monday, November 14, 2011
Fidelity Magellan's Alpha over Many Managers
Fidelity Magellan's Alpha over Many Manager
Sunday, October 30, 2011
Stock-Pickers and the Illusion of Validity
If you ask 1,000 stock-pickers for an explanation for why they chose to buy a particular stock, you are likely to get 1,000 different answers.
Tuesday, October 25, 2011
IFA’s Concerns with ETFs
IFA’s Concerns with ETFs
Wednesday, October 19, 2011
Pension Gate
Plan sponsors and trustees of investments such as retirement plans, foundations and endowments frequently implement an active investment strategy.
Wednesday, September 28, 2011
UBS: A Rotten Culture Inspires Rotten Actions
UBS: A Rotten Culture Inspires Rotten Actions
Monday, September 26, 2011
Investors Deserve Better From Yahoo's Breakout
I don’t mean to pick on Jeff Macke. His daily videos on Yahoo’s Breakout are no worse than what passes for financial journalism in much of the media.
Monday, September 26, 2011
Warren Buffett, Market Efficiency and the Disappearance of Alpha
Warren Buffett, Market Efficiency and the Disappearance of Alpha
Thursday, September 22, 2011
Up and Down, Down and Up
Intense volatility can be very scary for investors, making them susceptible to acting on visceral emotions.
Sunday, September 18, 2011
Indexing: Is It Appropriate for All Asset Classes?
Using the Morningstar Direct database, IFA performed its own study of how actively managed funds have done vs. the passively managed DFA funds in categories outside of domestic large cap. The table below summarizes the results:
Wednesday, September 07, 2011
The Turn of the Tide
The Turn of the Tide
Monday, August 29, 2011
Leverage- A Good Idea or a Dangerous Risk?
Leverage amplifies market returns - when the market goes down, the amplification of the negative return creates a hurdle that is difficult to overcome
Thursday, July 21, 2011
The Never-Ending Pursuit of Alpha
Both stock-picking and hiring active managers to pick your stocks for you are mug’s games. Very few investors, if any, receive alpha consistently.
Tuesday, July 12, 2011
Constructing Portfolios: It’s all about the Factors
Index Funds Advisors constructs its portfolios based on the three-factor asset pricing model that Eugene Fama and Kenneth French introduced in 1993.
Monday, July 04, 2011
Non-Traded REITs: One More Way for Investors to Be Parted from Their Money
A real estate investment trust (REIT) is a security that trades like a stock on the major exchanges and invests in commercial real estate directly.
Sunday, June 26, 2011
Cognitive Biases and Their Impact on Investment Decision-Making
Here, we look at a couple of real-world examples of cognitive biases and relate them to investor behaviors that IFA has observed more than a few times
Sunday, June 19, 2011
Planning for Retirement? Take Off Those Rose-Colored Glasses!
An article in the Wall Street Journal shows the problem of people not having the finances that they need for retirement will be worse than expected.
Monday, June 06, 2011
IFA’s Concerns with Currency Speculation and Trading
Currency trading is just another type of speculation, and as we all know, the expected return of speculation is zero before costs and negative after.
Thursday, June 02, 2011
CALPERS Arizona Land Speculation: The Taxpayer’s Dollars Are Just Dust in the Wind
CALPERS bought land in Arizona with the hope that it'd be developed into a residential community. The land sold for only 8% of its purchasing price!
Tuesday, May 31, 2011
Wall Street Still Running Amok
IFA implores taxpayers to keep an eye on government officials entrusted with public funds and to help them steer clear of the sharks of Wall Street.
Thursday, May 26, 2011
Tactical Asset Allocation: The Market-Timing Wolf in Sheep's Clothing
Tactical Asset Allocation, or TAA, is simply market-timing but with only a set portion of the whole portfolio. It is IFA's position that TAA is futile
Thursday, May 26, 2011
The Use of Statistics in Making Investment Decisions
IFA relies on the scientific method of statistical analysis. The most important application of statistics lies in the realm of hypothesis testing.
Wednesday, May 25, 2011
Will the Manager You Picked Deliver Alpha or Have You Been Fooled by Randomness?
Investors should not waste their time seeking managers who supposedly deliver alpha, or returns above what can be explained by the assumption of risk.
Wednesday, May 25, 2011
The Pursuit of Alpha: A Useful Endeavor or a Fool’s Errand?
The Pursuit of Alpha: A Useful Endeavor or a Fool’s Errand?
Thursday, May 05, 2011
What's the Significance?
This statistical significance will be discussed in the context of what investors care about first and foremost—expected returns and risk premiums.
Sunday, January 09, 2011
Burton Malkiel on Tech | Ticker
Look at the performance of mutual funds over the last forty years: It’s clear that index funds like Vanguard’s have a huge advantage over other guys.
Wednesday, September 22, 2010
Father Robert J Spitzer on Fiduciaries
What led to the financial crisis in the us? Why did we get to the point of catastrophic collapse? Why is it that our financial institutions seem to have drifted into this ethical neutrality that led to the complete absence of truth trust and transparency?
Sunday, September 12, 2010
The Pursuit of Alpha: A Useful Endeavor or a Fool’s Errand?
The Pursuit of Alpha
Sunday, September 12, 2010
Option Theory Does Not Refute Time Diversification
Option Theory Does Not Refute Time Diversification
Friday, September 03, 2010
Hawking’s Attack on God Draws Logical Response
The battle lines have been drawn on what promises to be the grand debate over Grand Design – Stephen Hawking’s latest work. In his book, Hawking directly fires at a cornerstone of faith — the need for a Creator of the universe. Sensitivity to this issue h
Thursday, July 29, 2010
Financial Regulatory Reform through the Eyes of Caritas in Veritate
Financial Regulatory Reform through the Eyes of Caritas in Veritate
Saturday, July 24, 2010
Mary Brunson on KRLA Part 1
Mary Brunson discusses the screening methodology used to create the Investing for Catholic Index Portfolios.
Saturday, July 24, 2010
Mary Brunson on KRLA Part 2
Mary Brunson discusses the mission the United States Conference for Catholic Bishops has encouraged her to undertake.
Wednesday, June 02, 2010
Investors Demanding Social Justice
The ICCR doesn’t accept that doing good and doing well have to be mutually exclusive at American companies, recent experience notwithstanding. If ever the corporate world could use a healthy infusion of responsibility, this would seem to be the time.
Thursday, May 27, 2010
Eugene Fama on CNBC's Squawk Box
The Father of Modern Finance talks with CNBC's Squawk Box.
Tuesday, April 27, 2010
Father Finn on a Clear Path in the Fight for Transparency
The battle lines have been drawn all over the financial world: Wall Street vs. the government, Main Street vs. Wall Street, Main Street vs. Wall Street AND the government…
Sunday, April 25, 2010
Vatican Radio Interviews Fr. Seamus Finn, OMI Interviewed on Bringing Faith Values to the Financial Sector
Putting faith principles back into the world of finance and business is not usually the business of priests, but it is for Oblate Seamus Finn, Director of the Justice, Peace/Integrity of Creation Office of the Missionary Oblates of Mary Immaculate in Washi
Sunday, April 25, 2010
Bank of America is 2nd Major U.S. Financial Institution to Face Derivatives Proxy Vote By Shareholders
The verdict at BofA’s Wednesday Annual Meeting comes on the heels of a huge 30 percent support at Citigroup on the same Resolution. Of the four derivatives disclosure resolutions being filed, that with BofA may be the most telling, considering how the mish
Tuesday, April 20, 2010
Heeding the Call for Ethical Investment Strategies
Heeding the Call for Ethical Investment Strategies
Thursday, April 15, 2010
Shareholders: Treasury Should Be Consistent On Capitol Hill And On Wall Street By Voting Citi Shares For More Derivatives Disclosure
Major Citigroup Shareholder Meeting Vote Tuesday Gives U.S. Chance to be Consistent on Derivatives/Financial Reform; U.S. is Biggest Cit Shareholder With 27% Stake.
Thursday, April 01, 2010
JPMorgan, Citigroup Resist Nuns’ Proposal on Swaps Disclosure
Goldman Sachs Group Inc. and JPMorgan Chase & Co. aren’t doing “God’s work” when it comes to derivatives, according to investor groups of nuns and priests.
Thursday, April 01, 2010
JPMorgan, Citigroup Resist Nuns' Proposal on Swaps Disclosure
April 2 (Bloomberg) -- Goldman Sachs Group Inc. and JPMorgan Chase & Co. aren’t doing “God’s work” when it comes to derivatives, according to investor groups of nuns and priests.
Wednesday, March 24, 2010
DMFC SRI Presentation
Investing for Catholics Presentation
Sunday, February 28, 2010
Haiti : Vatican Radio Interview
S�amus Finn, OMI – talks about the situation in Haiti and re-development needs of the devastated country.
Monday, February 08, 2010
Father S�amus Finn Radio Interview - February 9th 2010
.mp3 Audio from radio interview
Monday, February 01, 2010
St. Paul and the Principles of Right Economic Order
Video of St. Paul and the Principles of Right Economic Order
Saturday, January 30, 2010
Are You an Active Investor?
The first step on the index funds journey is to recognize active investor behavior. If all investors were lined up in a row, could the active investors be identified? Active investors actively engage in stock picking, time picking (market timing), manager
Monday, January 18, 2010
Catholic Investing Effort Taps Top-Level Expert
Investing for Catholics today announced the addition of Father S�amus Finn, OMI as a consultant to the firm. Father Finn is the Director of Justice, Peace and the Integrity of Creation for the Missionary Oblates of Mary Immaculate. He has been selected by
Sunday, December 13, 2009
The crib is where we can learn the secret of true joy
"The crib is a school of life where we can learn the secret of true joy," which doesnt mean having many things, but signifies being loved by God, by giving to others for others and love one another.
Sunday, December 13, 2009
A Tribute to David Booth
Mr. David Booth’s $300 million gift to his alma-mater has to be a milestone in the annals of finance, economics and investments. University of Chicago’s announcement that its business school was being renamed Chicago-Booth.
Monday, November 30, 2009
Mr. Rogers' Neighborhood
John W. Rogers, Jr. counseled against over diversification which he noted was a "bad idea." Instead, he advised investors to focus on their "circle of competence", which in his case was financial stocks. These stocks were the "biggest weightings" in his po
Monday, November 30, 2009
To beat index funds, luck is your only hope
Investors who continue to send money to actively managed mutual funds in the hope that managers will be able to beat less-costly index funds are going to lose out almost all of the time, a new study finds.
Monday, November 16, 2009
False Prophets, Big Bucks
Professor Siegel predicted that "...the economy will avoid a recession" in 2008. His crystal ball also revealed that "the stock market will have another winning year in 2008" and that "financial stocks, which have plummeted 18% so far this year, will outpe
Sunday, November 08, 2009
Ethical Business Decisions: Pope Benedict’s Blueprint for Economic Justice
On Nov. 8, Supreme Knight Carl Anderson gave the following address to a gathering of business leaders and professionals at Fairfield University. His keynote presentation was centered on the recent social encyclical by Pope Benedict XVI, Caritas in Veritate
Tuesday, October 27, 2009
Harry M. Markowitz explains Portfolio Theory
what it is and how it's used from a top-down model from the asset classes to the investments. He covers Standard Deviation, Variance, Correlation, and Covariance. Markowitz also explains what happened in 2008 with Modern Portfolio Theory.
Friday, October 02, 2009
Mark T. Hebner - Big Losses, Big Government and Your Investments
Mark T. Hebner covers historic recovery patterns and probability of future returns, the risks and returns that come with big government, the role of commodities in your investments, the pros and cons of inflation-hedging securities, and an investment strat
Thursday, September 03, 2009
IFA's Position Statement on Investing
Mark Hebner describes IFA's Position on Investing
Monday, July 13, 2009
Why Don't You Just Give Your Broker a Gun and Tell Him to Shoot You?
"Brokerage activities are regulated under different laws and rules than advisory activities and generally do not give rise to the fiduciary duties that an investment adviser has to its clients." The agreement pointed out that the brokerage firm "...
Friday, July 03, 2009
The Signers of the Declaration of Independence
Sunday, June 28, 2009
CARITAS IN VERITATE
TO THE BISHOPS PRIESTS AND DEACONS MEN AND WOMEN RELIGIOUS THE LAY FAITHFUL AND ALL PEOPLE OF GOOD WILL ON INTEGRAL HUMAN DEVELOPMENT IN CHARITY AND TRUTH
Thursday, May 07, 2009
IFA's Quote of the Week - 54 (Dan Solin)
"If investors learned how to invest intelligently, according to the teachings of John Bogle and many, many others, they would be far better off."
Monday, April 20, 2009
Harry Markowitz - Portfolio Theory Vs. Financial Engineering, and Their Roles in Financial Crises
Harry Markowitz gives an IFA Exclusive Presentation on Portfolio Theory Vs. Financial Engineering, and Their Roles in Financial Crises. Markowitz explains the difference between Portfolio Theory and Financial Engineering. Markowitz also covers Black Monday
Monday, April 06, 2009
Clarion Call
When returns are poor (and sometimes even when they're good), investors wonder if things have changed. Is this time different? Does a buy-and-hold strategy still make sense?
Thursday, April 02, 2009
IFA's Quote of the Week - 52 (Fred Schwed Jr.)
“Once in the dear dead days beyond recall, an out-of-town visitor was being shown the wonders of the New York financial district. When the party arrived at the Battery, one of his guides indicated some handsome ships riding at anchor. He said, ‘Look, those
Thursday, March 26, 2009
IFA's Quote of the Week - 51 (Mark Hebner)
"Important services such as rebalancing, tax managed investments and tax loss harvesting help investors maximize returns at a given level of risk."
Tuesday, March 24, 2009
Testing Market Efficiency
A simple test determining whether or not the market does a good job of setting prices.
Wednesday, March 18, 2009
IFA's Quote of the Week - 50 (Warren Buffett)
"You only find out who is swimming naked when the tide goes out."
Tuesday, March 10, 2009
It's CNBC That Has Not Yet Hit Bottom
I am no fan of CNBC. It's not just the insufferable pomposity, smugness and arrogance of its anchors or the faux frenzied reporting from the floor of the NYSE that I find offensive.
Sunday, March 08, 2009
The Resilience of Capitalism: Part II
Now that February 2009 numbers are in, I wanted to update my discussion about this very challenging investment environment over the last 16 months and offer some much-needed perspectives. I am sympathetic to your concerns and want to help you through this
Thursday, March 05, 2009
IFA's Quote of the Week - 49 (Michael Edesess)
"Let’s change our verb tenses when speaking of investment markets."
Thursday, February 26, 2009
IFA's Quote of the Week - 48 (Mark Hulbert)
"It is very hard, if not impossible," he wrote in his study, "to justify active management for most individual, taxable investors, if their goal is to grow wealth."
Monday, February 23, 2009
Crime and Punishment
There are crimes you can spot and those you can't. The latter can really hurt you. The Madoff and Stanford scams had an eerie similarity about them: The promise of greater returns without additional risk. You have to feel the pain of their victims. Not on
Friday, February 20, 2009
The Invisible Hand and Why Prices Change
The Hebner model attempts to simplify free market forces into 3 simple variables: Price, Expected Return and Uncertainty. In short, prices move in the opposite direction of uncertainty so that expected returns can remain constant.
Sunday, February 08, 2009
IFA's Quote of the Week - 47 (Charles Ellis)
In his book Index Funds: The 12-Step Program for Active Investors, Mark Hebner identifies that 85% of investors are active investors. This means that a majority of investors handle their investments in one or more of the following ways:
Monday, January 26, 2009
Financial Pornography Thrives
SmartMoney recently published an article entitled "15 Great Stocks From the Great Depression." While the article is interesting, the premise is flawed. It perpetuates the myth that stock picking is a worthy endeavor for investors. Worse, it feeds the false
Wednesday, January 21, 2009
Active vs. Passive Investing
The debate between active vs. passive investing has dragged on for more than 40 years; certainly far longer than necessary as reams of academic research continue to reveal the failure of active management to outperform a passively managed and properly sele
Monday, January 12, 2009
Index Funds Advisors, Inc. Interview with Harry M. Markowitz
Index Funds Advisors, Inc. Video Interview with Harry M. Markowitz - 1990 Nobel Prize Winner and the Father of Modern Portfolio Theory
Sunday, January 11, 2009
IFA's Quote of the Week - 46 (John C. Bogle)
"We need a mutual fund industry with both vision and values; a vision of fiduciary duty and shareholder service, and values rooted in the proven principles of long-term investing and of trusteeship that demands integrity in serving our clients."
Thursday, January 01, 2009
IFA's Quote of the Week - 45 (Peter Cohan)
"Why didn't I just throw my money out of the window - and light it on fire?"
Sunday, December 21, 2008
IFA's Quote of the Week - 44 (Burton Malkiel)
"It's like giving up a belief in Santa Claus."
Tuesday, December 16, 2008
Mark Hebner's Response to Madoff's Mayhem
Like so many of you, I have watched in great dismay as the horrific details unfold regarding the Bernard Madoff investment scam—one that has quickly shaped up to be the biggest such scam in history.
Thursday, December 11, 2008
IFA's Quote of the Week - 43 (The Financial Press)
"The $50 billion allegedly lost to investors would make Madoff's fund one of the biggest frauds in history."
Tuesday, December 09, 2008
The Resilience of Capitalism
As a general rule of thumb, the equity allocation of your portfolio should have an approximate time horizon or holding period of 7 to 10 years. This would indicate that you should have an allocation of fixed income that will meet your withdrawal needs for
Tuesday, December 09, 2008
Eugene Fama, Jr. on Efficient Markets
Index Funds Advisors, Inc. Video Interview with Eugene Fama Jr.
Thursday, December 04, 2008
IFA's Quote of the Week - 42 (Franklin D. Roosevelt)
“The only thing we have to fear is fear itself.”
Tuesday, November 25, 2008
IFA's Quote of the Week - 41 (David G. Booth)
"You've already paid for the risk, so it might be good to stick around for the expected return."
Monday, November 17, 2008
IFA's Quote of the Week - 40 (William Bernstein)
"No one in his right mind would walk into the cockpit of an airplane and try to fly it, or into an operating theater and open a belly. And yet they think nothing of managing their retirement assets. I’ve done all three, and I’m here to tell you that mana
Sunday, November 02, 2008
IFA's Quote of the Week - 39 (Marlena I. Lee)
"Return generation is the responsibility of the market, which sets prices to compensate investors for the risks they bear. "
Wednesday, October 22, 2008
What to do about the Financial Transparency Crisis
The current financial crisis is a combination of three ill winds that combined to make the “perfect” storm. One ill wind is the bursting of the real estate bubble; the second is the ongoing consequences of the subprime and near-subprime mortgage fiasco;
Sunday, October 19, 2008
IFA's Quote of the Week - 38 (Mark T. Hebner)
"Investing in the absence of an investment policy statement reduces decision making to an individual event-driven process of chasing short-term results, eliminating the expectation of achieving the long-term returns of capitalism."
Wednesday, October 08, 2008
To Optimize or Not Optimize
One question that clients sometimes ask is, “Are IFA’s portfolios optimized?” It’s a fair question. That word “optimization” is thrown around somewhat loosely, and it certainly sounds like a good thing.
Sunday, October 05, 2008
IFA's Quote of the Week - 37 (Harry Markowitz)
"To reduce risk it is necessary to avoid a portfolio whose securities are all highly correlated with each other. One hundred securities whose returns rise and fall in near unison afford little protection than the uncertain return of a single security."
Thursday, September 25, 2008
IFA's Quote of the Week - 36 (Mark T. Hebner)
"It is a certainty that equity markets will be full of uncertainty. This uncertainty is the reason investors should expect returns."
Tuesday, September 16, 2008
IFA's Quote of the Week - 35 (Jeremy J. Siegel)
"The current financial crisis calls out for new products and services as well as more, not less, information about what is safe and profitable in the future environment."
Thursday, September 11, 2008
IFA's Quote of the Week - 34 (Michael C. Keenan)
"Fiduciaries should strongly consider index funds as an alternative to actively managed funds. Index funds incur about 80% less in transaction costs than actively managed funds…long-term returns for actively managed funds trail their respective indexes."
Thursday, September 04, 2008
IFA's Quote of the Week - 33 (Matt Krantz)
"Remember when you buy a commodity, you're not buying something that generates earnings and profit. You're buying a hard asset and hoping another buyer will be willing to pay more for that asset in the future."
Thursday, August 28, 2008
IFA's Quote of the Week - 32 (Benjamin Graham)
"The investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage."
Sunday, August 17, 2008
IFA's Quote of the Week - 31 (Kermit the Frog)
"It's not easy bein' green."
Sunday, August 10, 2008
IFA's Quote of the Week - 30 (Bill Miller)
“It seemed like we needed a 12-step program to cure us of our addiction to buying beaten-up stocks..."
Thursday, July 31, 2008
IFA's Quote of the Week - 29 (Benjamin Graham)
"The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his convenienc
Thursday, July 24, 2008
IFA's Quote of the Week - 28 (James Pardoe)
"Let other people overreact to the market...if you can stay cool while those around you are panicking, you can surely prevail."
Thursday, July 24, 2008
IFA's Quote of the Week - 27 (John Lennon)
"Nobody told me there’d be days like these."
Wednesday, July 02, 2008
IFA's Quote of the Week - 26 (Dan Solin)
"Work exclusively with fee-only advisors: It eliminates a huge conflict of interest."
Sunday, June 29, 2008
IFA's Quote of the Week - 25 (William F. Sharpe)
"Some investments do have higher expected returns than others. Which ones? Well, by and large they’re the ones that will do the worst in bad times."
Thursday, June 19, 2008
IFA's Quote of the Week - 24 (Truman A. Clark)
"Investors acquiring commodity futures in expectations of higher returns, lower risk, and improved inflation protection are making bets. Current evidence indicates that the odds are against them."
Wednesday, June 11, 2008
IFA's Quote of the Week - 23 (Richard C. Green)
"For a long career full of breakthroughs that have advanced our understanding of financial markets, and his early fundamental work on efficient markets, we are proud to have Professor Fama as the first recipient of this prestigious award."
Tuesday, June 03, 2008
IFA's Quote of the Week - 22 (Harry Markowitz)
"A good portfolio is more than a long list of good stocks and bonds. It is a balanced whole, providing the investor with protections and opportunities with respect to a wide range of contingencies."
Monday, May 26, 2008
IFA's Quote of the Week - 21 (Rex Sinquefield)
"So who still believes markets don't work? Apparently it is only the North Koreans, the Cubans and the active managers."
Sunday, May 18, 2008
IFA's Quote of the Week - 20 (David F. Swensen)
"When you look at the results on an after-fee, after-tax basis over reasonably long periods of time, there's almost no chance that you end up beating the index fund."
Sunday, May 11, 2008
IFA's Quote of the Week - 19 (Michael C. Keenan)
"Fiduciaries should strongly consider index funds as an alternative to actively managed funds. Index funds incur about 80% less in transaction costs than actively managed funds…long-term returns for actively managed funds trail their respective indexes."
Sunday, May 04, 2008
IFA's Quote of the Week - 18
"Some fiduciary boards, particularly those composed largely of non professionals, do not adequately understand the true returns, risk and cost associated with investment in hedge funds."
Sunday, April 27, 2008
IFA's Quote of the Week - 17 (Jack Meyer)
"Most people think they can find managers who can outperform, but most people are wrong. I will say that 85% to 90% of managers fail to match their benchmarks, if you properly specify their benchmarks."
Sunday, April 20, 2008
IFA's Quote of the Week - 16 (George Miller)
"Many 401(k)-style plans charge hidden fees that can cut deeply into worker's retirement savings, and many plan participants do not have access to low-cost investment options--index funds--that can help them boost their retirement savings."
Sunday, April 13, 2008
IFA's Quote of the Week - 15 (Theodore Aronson)
"None of my clients are taxable... Once you introduce taxes, active management probably has an insurmountable hurdle. We've been asked to manage taxable money -- and declined."
Sunday, April 06, 2008
IFA's Quote of the Week - 14 (John C. Bogle)
"Surprise! The returns reported by mutual funds aren't actually earned by mutual fund investors."
Sunday, March 30, 2008
IFA's Quote of the Week - 13 (Ben Kenobi)
Could there be more appropriate quote to summarize a current hedge fund disaster on this April Fool's Day?
Tuesday, March 25, 2008
IFA's Quote of the Week - 12
"res tantum valet quantum vendi potest." - Latin for: "A thing is worth only what someone else will pay for it."
Sunday, March 16, 2008
IFA's Quote of the Week - 11 (Burton Malkiel)
"We conclude that hedge funds are far riskier and provide much lower returns than is commonly supposed."
Monday, March 10, 2008
IFA's Quote of the Week - 10 (Burton Malkiel)
"Historically, the stock market is like a gambling casino with the odds in your favor. Over the long pull, stocks are given something like nine and a half to ten percent compounded per year. The banks have probably given you something in the order of four
Sunday, March 02, 2008
IFA's Quote of the Week - 9 (Merton Miller)
"If there's 10,000 people looking at the stocks and trying to pick winners, one in 10,000 is going to score, by chance alone, a great coup, and that's all that's going on. It's a game, it's a chance operation, and people think they are doing something purp
Sunday, February 24, 2008
IFA's Quote of the Week - 8 (Harry S. Truman)
"The only thing new in this world is the history you don't know."
Sunday, February 17, 2008
IFA's Quote of the Week - 7 (William F. Sharpe)
William Sharpe tells us that if we want to achieve higher expected returns, we must be able to both emotionally and financially be able to withstand the increased volatility that inevitably comes with higher expected returns. Risk is the source of returns.
Sunday, February 10, 2008
IFA's Quote of the Week - 6 (Mark T. Hebner)
As tax reporting documents trickle in and investors ponder their current tax situation, it’s a good opportunity to give you some insight into a powerful tax-savings tool called tax loss harvesting. In fact, the recent market downturn provides you with an o
Sunday, February 03, 2008
IFA's Quote of the Week - 5 (Warren Buffet)
Widely known as the Oracle of Omaha, Warren Buffett is one of the most admired investors in the world. Hordes of investors may bend a listening ear to capture Buffett’s every word, but few seem to heed his sage advice to buy and hold.
Sunday, January 27, 2008
IFA's Quote of the Week - 4 (William Bernstein)
William Bernstein’s quote conveys two important messages. First, he articulates an investor’s inability to successfully profit from predicting the short-term future movements of the stock market. Second, and equally important, Bernstein sheds light on the
Sunday, January 20, 2008
IFA's Quote of the Week - 3 (Charles Ellis)
Charles Ellis was an early proponent of indexing. His quote addresses two important points: First, we should expect the stock market to rise over time, but take us on some ups and downs along the way. Second, the more educated we are about risk (the reason
Sunday, January 13, 2008
IFA's Quote of the Week - 2 (Burton Malkiel)
This witticism uncovered by Burton Malkiel introduces Chapter 11 of his enduring classic A Random Walk Down Wall Street. This section of Malkiel's book rallies support for Eugene Fama's Efficient Market Theory.
Sunday, January 06, 2008
IFA's Quote of the Week - 1 (John C. Bogle)
"You will almost never find a fund manager who can repeatedly beat the market. It is better to invest in an indexed fund that promises a market return but with significantly lower fees."
Thursday, April 12, 2007
Mauboussin: Why the Market is Smarter Than You Are
Most people who write about the wisdom of crowds offer colorful anecdotes about crowd intelligence but don't explain why groups are smarter than individuals. In a recent piece, Explaining the Wisdom of Crowds, Legg Mason strategist Michael Mauboussin solv
Friday, March 30, 2007
In Search Of: A New Name For "Passive"
One of the many reasons "passive" investing gets dissed is that its name--"passive"--is both misleading and deflating. Who wants to be "passive"? The folks who do well in life are active, the ones who have gumption, the ones who get up off the couch and
Wednesday, March 14, 2007
Will the "Value Effect" and "Size Effect" Persist? Do They Even Exist?
In my "dumbest column of the year" post, I suggested that DFA and other smart investors have capitalized on the "value effect" to design better passive funds. Astute readers pointed out that the value effect is a theory, not a fact, and that it might soon
Sunday, March 11, 2007
Dumbest Column of the Year
When you first stumble across this recent column from MSN Money, it seems that the writer (Tim Middleton) might just be playing an early April Fool's joke on his readers. After reading the the rest of the text, however, it's clear that he isn't.
Sunday, March 04, 2007
2 + 20, and Other Hedge Fund Math
2 + 20, and Other Hedge Fund Math
Friday, September 22, 2006
Amaranth's Losses Top $6 Billion
Amaranth Advisors LLC, the hedge fund firm that stumbled over massive wrong bets on natural gas futures, said late Wednesday that its losses had climbed to more than $6 billion.
Wednesday, December 07, 2005
Investors Should Steer Clear of Hedge Funds, say Experts
Investors Should Steer Clear of Hedge Funds, say Experts
Thursday, December 01, 2005
Interview with Rex Sinquefield (transcript)
Rex Sinquefield is Chairman and Chief Investment Officer of Dimensional Fund Advisors. Rex received his B.S. from St. Louis University and his MBA from the University of Chicago. He has contributed numerous articles for books, academics and professional jo
Thursday, September 29, 2005
Two Investment Gurus: Index Funds are Path to a Winning Investment
Two Investment Gurus: Index Funds are Path to a Winning Investment
Monday, July 25, 2005
The Myth of Fund Ratings
At least 80% of actively managed funds underperform the S&P 500 in any 10 year period—and there are indexes that perform better than the S&P 500. If risk-adjusted returns are taken into account, funds lose out even more. Fund returns are uncorrelated, so d
Tuesday, July 19, 2005
Morningstar Study: Short-term Buying and Selling Equals Lower Returns
Morningstar Study: Short-term Buying and Selling Equals Lower Returns
Thursday, September 09, 2004
The Short Book on Investing
Ten Tips to Becoming a Smarter Investor
Wednesday, December 31, 2003
DFA vs Vanguard
Research shows that for a long-term investment strategy, Dimensional Fund Advisors (DFA) consistently delivers superior results to Vanguard. In a survey of between 1,100 and 2,000 investment advisors held three times between 1997-2002, Dalbar Research rate
Tuesday, October 14, 2003
Interview with Kenneth French
Kenneth R. French is the NTU of Professor of Finance at the MIT Sloan School of Management. He is an expert on the behavior of security prices, investment strategies, and the management of financial risk.
Tuesday, September 09, 2003
Emerging Markets Rebounding
Which equity index offers a price/earnings ratio of 14x, a dividend yield of 2.6%, and annualized earnings growth over the past five years of 12%? The answer will come as a surprise to many investors.
Wednesday, September 03, 2003
Terminator Pulls Trigger on Indexing, Sort of
Arnold Schwarzenegger owns approximately 5% of Dimensional Fund Advisors, the secretive mutual fund index group in Santa Monica that is popular among index advisors and institutional investors. Ironically, while he appears to have done relatively little in
Sunday, August 24, 2003
TIPs and Broad Market Bond ETFs to Launch in Q4
Two new bond ETFs are poised to launch this Fall following initial regulatory approval by the SEC, Barclays Global Investors announced.
Sunday, August 17, 2003
High Valuations are counting on Earnings Growth
Wall Street analysts predict substantial earnings improvement for US companies in the coming year, and investors have taken note.
Tuesday, August 12, 2003
Science vs. Art in the investment arena
Index Funds Advisors Inc. explains how investors can relax and make more money
Thursday, August 07, 2003
Risk: What Exactly Is It?
Risk takes on many guises and can be different things to different people.
Wednesday, July 30, 2003
Vanguard Plans New VIPERS and Sector Funds
The Vanguard Group announced nine VIPER ETFs as well as ten new sector funds and a large-capitalization fund.
Monday, July 28, 2003
Do Internet ETFs justify their recent run-up?
Internet ETFs somewhat deserve their recent run-up, but we would be cautious.
Monday, July 21, 2003
The Stockholm Syndrome and the Market
Since March 2000, many investors have found themselves victims of abuse. This April ten of the nation's top investment firms settled enforcement actions involving conflicts of interest between research and investment banking.
Wednesday, July 16, 2003
Bridgeway's Montgomery 'Indexes' the Market's Smallest Companies
An Interview with Bridgeway's John Montgomery
Monday, July 14, 2003
Reversal of the Mean: dogs become stars overnight
A surprising negative correlation of -77% exists between last year poor results and this year's shining ones so far for the following high-tech ETFs that comprise the worst performing ETFs in 2002.
Wednesday, July 09, 2003
Managers vs. Indexes - Q2 is a Draw, but Long-Term Results Favor Benchmarks
It was a dead heat in the second quarter as active managers beat the relevant S&P index in four out of the nine style boxes, but lost to the index in four other categories. One style box, mid-cap blend, showed a near tie.
Tuesday, July 01, 2003
Domestic Indexes Enjoy Strong Second Quarter
Domestic Indexes Enjoy Strong Second Quarter in 2003
Monday, June 30, 2003
Assets in Broad U.S. Index ETFs Jump in May
The total combined assets of the 114 U.S. exchange-traded funds were $118.44 billion in May, according to the latest data from Investment Company Institute, the national association of the investment company industry.
Sunday, June 22, 2003
Breaking Down the Style ETFs
Investors who use index-linked exchange-traded funds to slice and dice various parts of the U.S. market can choose from benchmarks from Russell, S&P/Barra, and Dow Jones.
Wednesday, June 18, 2003
ETFs Come In Different Flavors
Although existing exchange-traded funds each track a particular index, they are not all created equal.
Monday, June 16, 2003
Indexing Goes Global - International Exchanges Embrace ETFs
Although exchange-traded funds have experienced phenomenal growth in the U.S., there are actually more ETFs trading on foreign exchanges - 169 ETFs currently call an overseas exchange home, while 114 funds are listed on domestic U.S. exchanges. However, U.
Thursday, June 12, 2003
S&P Study Shows Cheaper Funds Outperform
S&P reported that, on average, funds with lower expense ratios have outperformed their more expensive peers in eight out of the nine domestic fund style categories over a one, three, five, and ten-year annualized basis.
Wednesday, June 11, 2003
'Safe' options: ETFs a good platform for their use
Investors believe options are risky, and rightly so when they are used alone. But they take on a new light when an investor already owns an asset being optioned. ETF investors in particular can exploit their use to protect their holdings in an entirely con
Tuesday, June 10, 2003
Gold ETF to Test Retail Investor Demand
An impending Exchange-Traded Fund based on gold is stirring debate over whether it will make gold so easy to own that a flood of new retail investors will send the precious metal skyward.
Sunday, June 08, 2003
The Dangers of Dollar-Cost Averaging Small Amounts with ETFs
Exchange-traded funds have low annual fees and tax distributions, but brokerage transaction fees can remove all the benefits for unwary small investors. Dollar cost averaging in small amounts, a great strategy with traditional mutual funds, is a particular
Thursday, June 05, 2003
ETF Asset Data from the ICI for April 2003
Exchange-traded fund assets continue to rise in the bear market, topping $110 billion in April, according to the latest figures released by the Investment Company Institute, the trade group for the mutual fund industry.
Tuesday, June 03, 2003
DFA hard to buy, easy to own.
The latter is the professor-run hedge fund that imploded because the risks it was trying to avoid bit it in the backside. DFA, likewise run by a coven of finance professors, doesn't avoid risk-it relishes it.
Sunday, June 01, 2003
Broad Domestic Equity Indexes in May
The Dow Jones Industrial Average rose 3.69% in May, closing at 8793.12. The Dow Jones Industrial Average is up 5.41% for the year, according to Dow Jones Indexes.
Tuesday, May 27, 2003
Fidelity to Launch Nasdaq Composite ETF
Yet another major player is set to enter the ETF industry. Earlier this week mutual fund giant Fidelity filed for its first exchange-traded fund that will track the Nasdaq Composite index.
Monday, May 26, 2003
ETF Industry Poised for Next Round of Growth
The exchange-traded fund universe is expanding - at last count growing to 135 ETFs trading in the U.S. with over $112 billion in assets under management. Likewise, in the coming weeks we'll be enhancing our own editorial coverage of ETFs with more frequent
Monday, May 26, 2003
A Mutual Fund to Drool Over
Bill Miller, the manager of the Legg Mason Value Trust fund, has managed to do what no other current manager has done - beat the S&P 500 index twelve years in a row. Surely that incredible feat cannot be attributed to random chance or luck. Therefore, it f
Tuesday, May 13, 2003
S&P Active vs. Passive Study Focuses on Sector Funds
Standard & Poor's released a study showing active sector fund managers have fared relatively well against sector indexes that track thin slices of the market over the past five years. However, over the last three years a majority of active funds beat the i
Thursday, May 08, 2003
Interview with Patrick O'Connor, Index Portfolio Manager at Barclays Global Investors
If you have unanswered questions about the complex inner workings of exchange-traded funds, then look no further.
Wednesday, May 07, 2003
Vanguard Moves to Stop Arbitrage Trading in 9 International Funds with Redemption Fees
Vanguard announced it will levy a 2% redemption fee on sales of shares held less than two months for nine of its international funds:
Sunday, May 04, 2003
Equity Indexes Rally in April
The Dow Jones Industrial Average rose 5.99% in April and is up 1.55% for the year.
Tuesday, April 29, 2003
AMEX Intellidex ETFs Launch, Pushing the Active/Passive Envelope
PowerShares Capital Management will introduce two exchange-traded funds tracking new proprietary indexes developed by the American Stock Exchange. The Dynamic Market Portfolio and the Dynamic OTC Portfolio will both launch later this week on May 1 and will
Tuesday, April 22, 2003
Rydex to Launch ETF Based on Equal-Weighted S&P 500
Rydex, the fund family best known for its lineup of sector and leveraged index funds catering to active traders, said it will soon launch an exchange-traded fund that tracks an equal-weighted S&P 500 index.
Sunday, April 20, 2003
ETF Advisors to Close Its Treasury ETFs
ETF Advisors announced it would close its four Treasury FITR funds: Treasury 1 FITR (TFT), Treasury 2 FITR (TOU), Treasury 5 FITR (TFI), and Treasury 10 FITR (TTE).
Monday, April 14, 2003
S&P Reports Indexed Assets for 2002
New York-based index provider Standard & Poor's released the results of its 2002 annual survey of assets linked directly to its domestic benchmarks.
Wednesday, April 09, 2003
Emerging Markets iShares Begin Trading
The iShares MSCI Emerging Markets began trading today on the American Stock Exchange under the ticker EEM. The new exchange-traded fund, managed by Barclays Global Investors, is benchmarked to the MSCI Emerging Markets Free (EMF) index.
Monday, April 07, 2003
S&P Reports Active vs. Passive Scorecard for Q1 2003
Thursday, April 03, 2003
S&P Reports Indexed Assets for 2002
New York-based index provider Standard & Poor's released the results of its 2002 annual survey of assets linked directly to its domestic benchmarks. Based on the 2002 survey responses, S&P estimates that approximately 90% of the total S&P indexed assets ma
Thursday, April 03, 2003
Asset Allocation and Its Contribution to Returns: Evidence From International Markets
Numerous studies on the performance of diversified U.S. equity portfolios have demonstrated the central role that asset allocation policy plays in determining variation of portfolio returns.
Thursday, April 03, 2003
Vanguard To Change Benchmarks for Seven Index Funds
Vanguard announced yesterday that it will transition to new MSCI U.S. equity benchmarks for several of its index funds, a move the Valley Forge-based fund group has been positioning itself for over the past several months, and perhaps years.
Tuesday, April 01, 2003
Domestic Indexes Make Some Gains in March
The Dow Jones Industrial Average rose 4.29% in March, and is down 1.33% for the year, according to Dow Jones Indexes. Measuring Europe, the Dow Jones STOXX 50 index was up 3.26% for March, and is down 7.11% for the year.
Sunday, March 16, 2003
Balanced & Lifestyle Funds
One thing the mutual fund industry does well is to create a product and then create demand for that product, even when the product may not be one that is in the investors' best interests.
Thursday, March 06, 2003
International Diversification in Retirement Accounts
International diversification is an issue that should have been settled a long time ago. However, many investors believe that cross-border diversification increases risk. Now, new support from academics provide new evidence of its value as a risk reducer.
Sunday, March 02, 2003
Domestic Indexes Fall Again in February
The U.S. blue-chip Dow Jones Industrial Average fell 3.06% in February - the Dow is off 6.4% for the year. Measuring Europe, the Dow Jones STOXX 50 index was down 5.54% for February; year-to-date the index is down 12.2%. The Dow Jones Asian Titans 50 index
Friday, February 28, 2003
Stock Price Best Value Guide,
A visit from one of the world's leading investors casts a fresh light on how markets work and the effects of the war in Iraq.
Thursday, February 27, 2003
Interview with Paul Kaplan, Morningstar Director of Research
Chicago-based Morningstar, Inc. has ventured into a crowded index industry with the debut of 16 proprietary equity benchmarks that correspond to the firm's heralded style boxes. Morningstar's director of research, Paul Kaplan, sat down with us to discuss w
Wednesday, February 26, 2003
ETF Assets Decline in January
The combined assets of the nation's exchange-traded funds (ETFs) were $95.66 billion in January, according to the Investment Company Institute, falling from a December 2002 high of over $102 billion.
Thursday, February 20, 2003
Investors overpay Magellan by $330 million
Magellan's rationale for charging $330 million more than Vanguard's S&P 500 fund every year is simple: They provide active-management to enhance performance and beat the S&P 500. Here's how Magellan's manager Robert Stansky described his strategy...
Wednesday, February 19, 2003
How to Use the Data Section of IndexFunds.com
Since the performance data on this site was recently updated, we thought now might be a good time to post a primer on how to use the handy data tools and screeners on IndexFunds.com.
Monday, February 17, 2003
Interview with Barclays ETF Guru, Lee Kranefuss
Lee Kranefuss is the chief executive officer for Barclays Global Investors' Individual Investor and Exchange-Traded Products Business, where he is responsible for all of BGI's exchange-traded funds products as well as traditional mutual funds
Tuesday, February 11, 2003
Vanguard in Favor of More Fund Holdings and Cost Disclosure
The Vanguard Group said it supports the SEC proposal that could force mutual funds to disclosure more information about portfolio holdings and fund costs, according to a statement released today by the Valley Forge-based fund shop.
Thursday, February 06, 2003
Barclays Global Investors to Introduce South Africa, China ETFs
San Francisco-based Barclays Global Investors continues to beef up its lineup of international iShares with two new exchange-traded funds tracking the broad South African and Chinese markets.
Sunday, February 02, 2003
Major U.S. Index Returns for January 2003 - Most Equity Benchmarks Down for the Month
The U.S. blue-chip Dow Jones Industrial Average fell 3.03% in January, after losing 16.76% in 2002. Broad international indexes were also down for the month. Measuring Europe, the Dow Jones STOXX 50 index was down 10.45% for January. The Dow Jones Asian Ti
Friday, January 31, 2003
Interview with Gene Fama Jr.
Gene Fama Jr. is vice president of Dimensional Fund Advisors (DFA), the funds management firm founded on the academic principles of diversification first articulated by his father, Eugene Fama, in the 1960s. He explains to David Chaplin how the DFA philoso
Thursday, January 30, 2003
It's Why They Call It The Equity "Risk" Premium
One of the most popular investment books of recent times was Dow 36,000: The New Strategy For Profiting From The Coming Rise In The Stock Market. The premise of the authors, James K. Glassman and Kevin A. Hassett, was that equity investing was not risky -
Wednesday, January 29, 2003
Rydex Registers New Funds Based on Exotic S&P Indexes
Standard & Poor's Indexes recently developed two interesting benchmarks, and investors may soon have access to them through passive funds.
Tuesday, January 28, 2003
Does Equity Indexing Have Hidden Risks?
Last week Standard & Poor's released its quarterly active vs. passive mutual fund scorecard with stark results: in most cases a majority of active funds have failed to beat their relevant index in the bear market of the past couple years.
Thursday, January 23, 2003
The Dangers of Dollar-Cost Averaging Small Amounts with ETFs
Exchange-traded funds often have lower expense ratios than comparable traditional index funds. However, since ETFs trade like stocks, investors must pay commissions every time they buy or sell shares.
Wednesday, January 22, 2003
SEC Votes in Favor of Fund Proxy Vote Disclosure
SEC Votes in Favor of Fund Proxy Vote Disclosure
Tuesday, January 21, 2003
Dollar-Cost Averaging Small Amounts with ETFs
Exchange-traded funds generally have lower expense ratios than comparable traditional index funds. However, since ETFs trade like stocks, investors must pay commissions every time they buy or sell shares.
Tuesday, January 21, 2003
S&P Releases Active vs. Passive Scorecard for 2002
Standard & Poor's disclosed the second installment of its running quarterly scorecard that tracks the number of actively-managed mutual funds that best relevant S&P benchmarks.
Wednesday, January 15, 2003
Financial Planning � La Carte
IndexFunds.com's second book, Index Funds - Strategies for Investment Success by Will McClatchy, recently hit the shelves. The book is designed as a guide for investors of all stripes who want to learn more about the benefits of index or passive investing.
Tuesday, January 14, 2003
The Probability of Success (Or, Confessions of a Personal-Finance Writer)
Having spent nearly a decade writing about investment management for the little guy, I have come to the conclusion that I no longer believe in the basic premise of my public persona - a surreal cross between Harry Markowitz and Johnny Appleseed, as a frien
Monday, January 13, 2003
One-Decision Stocks & The Nifty-Fifty - The Price You Pay Does Matter
The "Nifty-Fifty" was a group of large-cap growth stocks that became the market's darlings in the late 1960s and into the early 1970s. They were great companies that became known as "one-decision" stocks - stocks that you should buy, no matter how expensiv
Monday, January 06, 2003
Interview with John Bogle, Vanguard Group Founder
John Bogle heads the Bogle Financial Markets Research Center, a think-tank funded by Vanguard and located at the company headquarters in quiet Valley Forge, Pennsylvania. He is the founder of the Vanguard Group and author of several best-selling investment
Friday, January 03, 2003
Barclays to Launch U.S. Fixed Income ETFs
Barclays Global Investors (BGI) filed with the Securities and Exchange Commission (SEC) January 2 to launch five fixed income exchange-traded funds (ETFs) based on Lehman indexes:
Thursday, January 02, 2003
Standard & Poor's Executives Discuss Future of Indexes
Excerpts from roundtable discussion with Bob Shakotko, Senior Vice President, S&P Index Services and David Blitzer, S&P 500 Chief Strategist. The full version of the interview was originally published in the December issue of The Index Insider, a new subsc
Tuesday, December 24, 2002
How Much International???
Many investors avoid international exposure in the mistaken belief that they are avoiding unnecessary risk. In fact, by failing to diversify cross border they actually substantially increase their risk. Token positions do little benefit the portfolio. The
Wednesday, December 18, 2002
Holiday News Wrap
Holiday News Wrap
Wednesday, December 11, 2002
Strategy vs. Outcome
Investing is a noisy process. In the short term, it is extremely difficult to distinguish between cause and effect. In the longer term, even with the best planning, wide variations in results must be expected. Investors must make decisions in an atmosphere
Monday, December 09, 2002
Interview with Morningstar's Peter Di Teresa
Peter Di Teresa is a consultant at Chicago-based Morningstar, Inc. Before moving on to a new role within Morningstar, he wrote the "Ask the Professor" column that frequently addressed issues concerning index investing.
Wednesday, December 04, 2002
More ETF Advantages - Diversification & Costs
In a previous article we looked at the tax benefits of exchange-traded funds, as well as fund swap strategies to harvest portfolio losses. This time we continue on with more ETF advantages.
Tuesday, December 03, 2002
Vanguard Shareholders Approve Index Fund Policy Changes
Retail index fund giant Vanguard yesterday announced that shareholders have approved several investment policy changes for various funds. Two of the changes apply specifically to Vanguard's stable of index funds.
Monday, December 02, 2002
Major U.S. Index Returns for November 2002 - Benchmarks Continue to Bounce Back
As of the market close on November 25, The Dow Jones Industrial Average gained 5.39% for the month. Excluding October's gain of over 10%, this is the biggest monthly gain for the Dow Jones Industrial Average since November 2001, according to Dow Jones Inde
Monday, December 02, 2002
Is the Market Rational? No, say the experts. But neither are you--so don't go thinking you can outsmart it.
Buy and hold. Diversify. Put your money in index funds. Pay attention to the one thing you can control--costs--and keep them as low as possible. Today that is pretty standard, if often unheeded, investment advice. Forty years ago it was revolutionary. The
Tuesday, November 26, 2002
Index Spotlight - Small-Cap Face-Off: Russell 2000 vs. S&P 600
Investors who opt to index the small-cap portion of their equity portfolios often hit a stumbling block when it comes time to select a benchmark. When most people talk about small-cap stocks, they usually refer to the Russell 2000 index, which was introduc
Thursday, November 21, 2002
Actively Managed Funds and the Implications of Increased Volatility of Equities
Recent years have seen a dramatic increase in the volatility of individual stocks. This has resulted in an increase in the cross-sectional volatility (dispersion) of returns in not only the U.S., but in international markets as well. It is important to not
Tuesday, November 19, 2002
ETF Tax Efficiency and Swapping Strategies
Exchange-traded funds are inherently more tax efficient than actively managed mutual funds, which have been rightly criticized for their tax-inefficiency. Tax-efficiency is a critical issue for advisors and investors because delaying the taxation of apprec
Monday, November 18, 2002
Total Domestic ETF Assets Over $100 Billion
There are currently 281 exchange-traded funds listed around the world, with over $140 billion in assets under management, according to a new report by Boston-based indexing giant State Street Global Advisors.
Thursday, November 14, 2002
A Look At the New Bond ETF Families
After years of development and regulatory hurdles, fixed-income ETFs have finally hit the market. San Francisco-based Barclays Global Investors beat ETF Advisors to the punch with a family of iShares tied to Lehman Brothers bond indexes. New York-based ETF
Tuesday, November 12, 2002
S&P Takes Active vs. Passive Debate to New Level with Quarterly Fund Scorecard
Standard & Poor's says it will begin keeping tabs on nearly 2,000 actively managed mutual funds to measure how they stack up against relevant S&P indexes. The new quarterly scorecard will use more sophisticated techniques to give investors a clearer pictur
Tuesday, November 12, 2002
First ADR Index ETFs Begin Trading on Nasdaq
Four new exchange-traded funds tied to Bank of New York American Depository Receipt (ADR) indexes began trading on the Nasdaq Exchange today. Called BLDRS, the new members of the ETF family will have expense ratios of 0.30%. The Bank of New York will serve
Monday, November 11, 2002
The Consulting Game
The one thing Wall Street tells you that you can always take to the bank is: "Past performance is no guarantee of future performance." Of course, they really hate telling you that, but they are required to. The rest of Wall Street's message is designed to
Thursday, November 07, 2002
ETFs Forge Bonds with Investors - Flurry of Product Development in ETFs Creates More Fund Alternatives
The debut of bond ETFs plus a slew of filings in the pipeline have elevated interest in ETF product development activity.
Monday, November 04, 2002
Interview with Mutual Fund Gadfly, Roy Weitz, of FundAlarm.com
Roy Weitz, CPA is the founder of FundAlarm.com, an independent and noncommercial website that serves as an unofficial community watchdog for the mutual fund industry. Mr. Weitz writes a revealing and colorful monthly commentary on the industry that is eage
Sunday, November 03, 2002
Major U.S. Index Returns for October 2002 - Benchmarks Bounce Back
The Dow Jones Industrial Average gained 11% for the month of October to close at 8427.41, according to Dow Jones Indexes. This represents the largest one-month gain in the index since January 1987. The Dow Jones Industrial Average is down 15.91% for the ye
Sunday, November 03, 2002
Spitzer Roasts Stock Analysts at Awards Ceremony
Imagine being invited to an award banquet only to find out later the main course is . . . you. That's exactly what happened to Wall Street analysts at the annual ceremony for Institutional Investor magazine's "All-Star Research Team" awards earlier this we
Thursday, October 31, 2002
New ETF Advisers Fixed-Income ETFs Begin Trading
Four new U.S. Treasury exchange-traded funds began trading today on the American Stock Exchange. The new funds, introduced by ETF Advisers, track Treasury securities with one, two, five and 10-year maturities. Called "fighters" - Fixed Income Trust Receipt
Wednesday, October 30, 2002
How Advisors Harvest Tax Losses with ETFs - The Basics
Financial advisors often use index fund tax-swap strategies as a way to maintain equity exposure while offsetting realized or unrealized gains in a portfolio, which is the closest thing to a free lunch in investing. Exchange-traded funds are becoming a pop
Monday, October 28, 2002
Total ETF Assets Decline in September
Total exchange-traded fund assets declined over $9 billion in September to about $82 billion, according to the Investment Company Institute. The ICI, the trade group for the mutual fund industry, keeps monthly tabs on ETF assets.
Tuesday, October 22, 2002
First ETFs Tracking Dow Jones Global Sector Indexes Introduced
Dow Jones Indexes said Credit Suisse Asset Management has licensed some of its global Sector Titans indexes for ETFs to be launched later this week. The new ETFs will be tied to the Dow Jones Banks Titans 30, the Dow Jones Technology Titans 30, and the Dow
Tuesday, October 22, 2002
Interview with Ron Ross, Author of The Unbeatable Market
Ron Ross is the author of a new book entitled The Unbeatable Market: Taking the Indexing Path to Financial Peace of Mind. This one caught our attention because of its accessability, and also because the author refuses to pull punches when it comes to confl
Monday, October 21, 2002
Two New European ETFs Begin Trading
UBS Global Asset Management introduced two new exchange-traded funds: the Fresco Dow Jones STOXX 500 (FEU) and the Fresco Dow Jones Euro STOXX 50 (FEZ). The new ETFs, which track the European and Eurozone markets, began trading on the New York Stock Exchan
Thursday, October 17, 2002
Q&A with Khalid Ghayur, MSCI Index Development
Khalid Ghayur knows a thing or two about indexes. He is global director of research and chief investment strategist for index provider Morgan Stanley Capital International (MSCI). Mr. Ghayur, who answered our questions from his Princeton office, is respons
Tuesday, October 15, 2002
Editors' Model Portfolios - Basic Domestic Stock/Bond Split
It doesn't get much simpler than this. We imagine John Bogle would like the elegant simplicity of this two-fund portfolio - one total market stock and one total market bond.
Tuesday, October 15, 2002
Editors' Model Portfolios - Basic Global Stock/Bond Split
This portfolio is similar to the basic domestic stock/bond split, but this time we add a broad international index fund for further diversification.
Tuesday, October 15, 2002
Editors' Model Portfolios - Core & more
This portfolio shouldn't be confused with the strategies that involve active funds. The idea of core and more is to lay down a core portfolio and explore by overweighting certain asset classes. Core and more portfolios can take on many shapes and sizes dep
Tuesday, October 15, 2002
Editors' Model Portfolios - Slice & Dice
This portfolio is a very simple interpretation of slice and dice, with large caps coupled with small value. This portfolio deviates from the total stock market approach by overweighting small value stocks.
Tuesday, October 15, 2002
Editors' Model Portfolios
Finding index funds that make up the building blocks of a diversified portfolio is important, but fitting them together is the real challenge. For our favorite index funds covering various asset classes, please see our editors' picks.
Tuesday, October 15, 2002
Interview with Gus Sauter, Vanguard Index Fund Manager
As managing director of the quantitative equity group at Vanguard, Gus Sauter oversees the management of $200 billion in 24 index funds. He is also responsible for the management of $4 billion in Vanguard's actively-managed funds, and $1 billion in Vanguar
Monday, October 14, 2002
Editors' Index Fund Picks - International and Emerging Markets Equity
The lists below single out some of favorite index funds covering the international and emerging markets equity asset classes. Many of the funds are based on MSCI's international EAFE index.
Monday, October 14, 2002
Frequent Monitoring of Your Portfolio Can Be Injurious to Your Financial Health
Behavioral finance has provided us with many valuable insights into how human behavior can impact investment results. For example, we have learned that individuals are highly risk averse - on average odds of 2:1 or greater are required to entice them to ac
Monday, October 14, 2002
Editors' Index Fund Picks - Domestic Bond Funds
Bond index funds can reduce risk in a portfolio. Indexing bonds also makes sense because of their lower yields compared to stocks. We like short-term bonds because of their low risk and lack of correlation with equity markets.
Sunday, October 13, 2002
Fund Manager Knows Best
As other corporations come clean, mutual funds still gloss over costs, hide top-dog pay and keep secret how they cope when self-interest conflicts with duty.
Sunday, October 06, 2002
Index Spotlight - Q&A with Don Phillips, Managing Director of Morningstar
Chicago-based Morningstar recently announced the availability of 16 proprietary equity indexes that correspond to its popular style boxes, which are recognizable to most mutual fund investors. We sat down with Morningstar managing director Don Phillips to
Wednesday, October 02, 2002
International Week - A Chat with FTSE on its New Global Style Benchmarks
We've been dancing to salsa music and downing piroshki to keep with the spirit of International Week here at IndexFunds.com. Maybe we're just looking for a diversion from the U.S. stock market, which suffered the worst quarter in recent memory.
Monday, September 30, 2002
Third Quarter Index Wrap
A sagging stock market continued to drag down most equity indexes in September, and third quarter returns were likewise ugly. The broad Russell 3000 index fell 16.2% during the third quarter on the heels of a 13.1% decline in the second quarter, according
Monday, September 30, 2002
International Week - Q&A with Steven Schoenfeld of Barclays Global Investors
As part of International Week here at IndexFunds.com, we recently sat down with Steven Schoenfeld of Barclays Global Investors. He is the chief business strategist for BGI's international equity products, encompassing approximately $65 billion in developed
Thursday, September 26, 2002
Diversifying Your Portfolio with International Equities
So you've got a house, a broad section of the U.S. stock market, and some bonds. You think you're diversified? Think again.
Sunday, September 22, 2002
Barclays Global Investors Set to Introduce Emerging Markets iShares
San Francisco-based Barclays Global Investors today announced it has filed a prospectus with the SEC for an iShares exchange-traded fund tied to the MSCI Emerging Markets Free index. If approved, it will be the first emerging markets ETF - currently BGI ha
Wednesday, September 18, 2002
S&P Releases Methodology, Constituents of New Hedge Fund Index
Standard & Poor's unveiled the list of forty hedge funds in its upcoming benchmark that will seek to track the largely unregulated industry. The S&P Hedge Fund Index will be divided into three sub-indexes with funds broken down by investment style: arbitra
Monday, September 16, 2002
Investors Buy High and Sell Low with Sector Funds
The pundits always lecture us about not chasing performance, but perhaps seeing the carnage investors inflicted upon themselves with ill-timed sector fund investments the past few years is the best way to make that lesson stick.
Sunday, September 15, 2002
A Quick Chat with Indexing Sage Diane Garnick of State Street Global Advisors
The staid world of indexing has been shaken up in the past few years by new competition and innovations. We sat down briefly with Diane Garnick to talk about some recent developments in passive investing.
Wednesday, September 04, 2002
FTSE Introduces Global Style Indexes
Index provider FTSE Group yesterday launched a new family of global growth and value equity benchmarks. They include new country-specific style indexes covering developed and advanced emerging markets nations, as well as regional and global benchmarks for
Monday, September 02, 2002
Index Providers Must Now be Proactive
"Innovate Or Evaporate." That's what it says on the Fortune mouse pad on my desk, compliments of the venerable magazine publisher that also manages a family of equity benchmarks. In light of recent events, other index providers would do well to adopt that
Sunday, August 25, 2002
Vanguard Lays Groundwork for Potential Switch to New Indexes
Retail index fund giant Vanguard today filed a preliminary proxy statement with the SEC seeking shareholder approval on several investment policy changes for many of its index funds.
Sunday, August 25, 2002
The Best Fund Family You've Never Heard of -- and Why It Doesn't Want Your Money
DFA manages $36 billion, of which about $23 billion is for institutions, with some $13 billion through funds sold to individual investors through financial advisors. It has no retail offerings -- you can't buy into their funds the way you would at Vanguard
Thursday, August 22, 2002
The Most Important Determinant of Investment Returns
Financial economists have demonstrated that the most important determinant of a portfolio's return is its asset allocation - the exposure to equity (and within equities the exposure to the risk factors of size and value) and fixed income (and within fixed
Tuesday, August 06, 2002
Measuring Active Small Cap Manager Performance: Why benchmarks matter
While index investing is generally accepted as a successful long-term strategy for large cap investing, it is still a common belief that active managers can beat small cap index benchmarks. This misconception is due to the perceived opportunity to add valu
Monday, August 05, 2002
New Bond ETFs Enable All-ETF Portfolios
Barclays Global Investors recently introduced four exchange-traded funds that track fixed-income indexes, and the move represents a critical and long-awaited development for ETF investors. Bonds are an important part of a balanced portfolio because of the
Thursday, August 01, 2002
Big Board Starts Trading Six More ETFs; MSCI to Introduce U.S. Benchmarks; July 2002 Major Index Returns
The New York Stock Exchange today began trading six new additional exchange-traded funds on the basis of unlisted trading privileges (UTP). They include the four new bond iShares, the iShares MSCI Japan (EWJ), and the Vanguard Total Stock Market VIPERs (VT
Wednesday, July 31, 2002
How the S&P 500 Rebalance Affects Index Funds
Standard & Poor's index committee decided in July to replace seven foreign stocks in the S&P 500 with domestic ones, and the shift affects countless index investors. For example, the Vanguard 500 fund was the nation's largest mutual fund at the end of June
Monday, July 29, 2002
ETF Assets Dip Below $90 Billion After May Highs
After clearing the $90 billion asset plateau for the first time in May, combined assets of the 102 exchange-traded funds listed in the U.S. fell to $88.95 billion in June, according to the latest figures from the Investment Company Institute.
Thursday, July 25, 2002
Fixed-Income iShares Launched As Investors Flock to Bond Funds
The first fixed-income exchange-traded funds began trading on the American Stock Exchange today, bringing the total number of ETFs listed on the AMEX to 121. The new funds, which are managed by San Francisco-based Barclays Global Investors and have expense
Tuesday, July 23, 2002
Vanguard Indexing Guru Examines Fund Performance in Bear Market
The financial media seems to love to take shots at indexing in bear markets, and now is obviously one of those times. The Wilshire 5000 index, the yardstick for the broad domestic stock market, is down a wrenching 16.60% for the year ending June 2002, acco
Monday, July 22, 2002
Vanguard to Introduce Three International ETFs
The Vanguard Group today filed an application with the SEC to introduce exchange-traded fund shares for three of its existing international index funds. Pending SEC approval, European Stock Index, Pacific Stock Index, and Emerging Markets Stock Index will
Wednesday, July 17, 2002
Close But Not Quite Perfect: Common Sources of ETF Tracking Error
Exchange-traded funds allow investors to track indexes in real time, but for several reasons they can't provide perfect correlation. Differences in fund and benchmark returns may arise - here is a list of some of the more common causes.
Monday, July 15, 2002
There Is Trouble In 401(k) Land
The historical record provided by academic studies is very clear that the winning investment strategy is to invest in funds that are passively-managed index funds, exchange-traded funds (ETFs), and passive asset class funds. Unfortunately, a conflict of in
Tuesday, July 02, 2002
Russell Indexes Gain Market Share
Russell indexes are becoming more widely accepted by institutional investors, according to a recent study of over 3,6000 U.S. equity products listed in Nelson Information's Marketplace Web database. The 10 most commonly used U.S. equity benchmarks are list
Monday, July 01, 2002
Two New Actively Managed Funds Join Vanguard Lineup; Precious Metals Fund Shuttered
The Vanguard Group today announced that two new funds will begin trading on Wednesday - Vanguard Mid-Cap Growth (VMGRX) and Vanguard International Explorer (VINEX).
Sunday, June 30, 2002
Most Equity Indexes Down in June
The major domestic stock index providers have reported June 2002 returns.
Wednesday, June 26, 2002
Big Board Launches Four New Indexes
The New York Stock Exchange today launched four equity indexes that track the performance of NYSE-listed stocks from broad market sectors.
Tuesday, June 25, 2002
Barclays to Launch Fixed-Income ETFs in July
San Francisco-based Barclays Global Investors today announced that four iShares tied to bond indexes will begin trading on the American Stock Exchange on July 26. The fixed-income ETFs, the first to trade in the U.S., will be linked to the Lehman 1-3 Year
Sunday, June 23, 2002
Index Spotlight: Broader MSCI EAFE Should Raise Bar for Active Managers
The benefits of using index funds to invest in the U.S. stock market have been well documented, but some make the argument that indexing international markets is a sure way to underperform. The smoking gun in the international active vs. passive debate is
Thursday, June 20, 2002
Most Slumping Equity Indexes in Red for the Year
After surging ahead earlier this week, most equity indexes fell sharply going into the weekend. It wasn't a great week for most equity fund investors, and a look at 1-year index returns shows pain has been the norm over the last 12 months. As a result, fun
Wednesday, June 19, 2002
ETF Total Assets Top $90 Billion
The total assets of all exchange-traded funds that trade in the U.S. rose to $92.86 billion in May 2002, according to the Investment Company Institute, the mutual fund industry's trade group. Total ETF assets increased by $7 million in May, with domestic f
Sunday, June 16, 2002
Sector ETFs are Relatively Cheap, but Still Carry Risks
In what seems like both a blessing and a curse for retail investors, exchange-traded funds offer the ability to invest in thin equity market slices cheaply relative to traditional sector mutual funds. According to Morningstar, the average sector mutual fun
Wednesday, June 12, 2002
Stockaholics Anonymous
The physical signs are impossible to conceal: sweating and increased palpitations at every market blip or earnings announcement; an uncontrollable twitch in your "trading finger"; that involuntary trance-like draw to the sound of Maria Bartiromo's voice; a
Monday, June 10, 2002
Index Spotlight: Dow Jones Style Index ETFs
Currently there are exchange-traded funds available that track style indexes from Russell, Standard & Poor's/Barra, and Dow Jones. At first glance these indexes seem similar, but as we've seen before subtle differences in index methodology can lead to sign
Tuesday, June 04, 2002
The Case for International ETFs
A long-standing tenet of investing is that a diversified portfolio should include a meaningful foreign stock component. During the awesome bull market in U.S. stocks in the late 1990's, however, many investors and advisers began to challenge this premise.
Sunday, June 02, 2002
May Wrap-Up
Here's how major equity indexes fared in May 2002, broken down by index provider:
Sunday, June 02, 2002
How the ETF Arbitrage Pricing Mechanism Works
Research indicates that most buy-and-hold investors are primarily drawn to exchange-traded funds for their lower expense ratios and potential tax efficiency. Most passive investors are not interested in trading during the day, but the ability to do so with
Wednesday, May 29, 2002
Lipper Introduces 'Active' Indexes
New York-based fund research firm Lipper last week launched several equity indexes based on actual stocks held by mutual funds from various categories. Lipper joins its competitor fund tracker Morningstar in launching equity indexes that could be the basis
Wednesday, May 29, 2002
Active Small-Cap Managers Add Value: Myth or Reality?
One of the more persistent claims from Wall Street is that the inefficiency of information in small-cap stocks allows active managers to exploit market mispricings and outperform passive benchmarks. It is important to note that part of this claim is true -
Tuesday, May 28, 2002
SEC Clears the Way for Fixed-Income ETFs
In an open meeting, the Securities & Exchange Commission today gave the initial go-ahead to Barclays Global Investors to launch domestic fixed-income exchange-traded funds. Barring a hearing on the matter, in 25 days the SEC will issue orders granting BGI
Thursday, May 23, 2002
Index Spotlight: FTSE & Russell Partner for Classification System
Index providers FTSE and Russell announced Russell indexes will now use FTSE's Global Classification system to establish sector data. The partnership allows investors to make apples-to-apples sector comparisons across the globe using Russell's domestic U.S
Wednesday, May 22, 2002
Dunn's Law Revisited
Occasionally even serious financial columns mention Dunn's Law as if it were an accepted economic maxim. It isn't, and it's dangerous to pretend that it might be.
Tuesday, May 21, 2002
Rebalancing Reduces Portfolio Volatility
Buy low, sell high. It's perhaps the oldest and most familiar of investment axioms. However, investors who neglect to periodically rebalance and let their portfolios run off the leash may not end up living by this mantra.
Thursday, May 16, 2002
Feel the Rush of Trading ETFs
On May 14, when the markets shot up for the second day in a row, did you feel an urge to get in on the action? Yes, I know we all have our standard asset allocation related to our age and so forth. And we're supposed to just let it be. But that's like watc
Tuesday, May 14, 2002
SEC Proposes Mutual Fund Ad Rules
The Securities & Exchange Commission (SEC) is seeking comment on proposed rules designed to ensure mutual fund advertisements aren't misleading to investors. The Commission specifically cited fund ads that touted skyrocketing performance in 1999 and 2000 a
Monday, May 13, 2002
ETFs Defy Traditional Classifications
Due to their unique structure and operations, exchange-traded funds don't fit neatly into traditional fund classifications. Data providers and industry observers still haven't decided for sure how to pigeonhole ETFs. In particular, several methods can be
Wednesday, May 08, 2002
ETF Tax Efficiency Part 2 - In Defense of Index Funds
Yesterday we posted an article on exchange-traded fund (ETF) tax efficiency. We looked at how ETFs function and why proponents claim they will be more tax efficient than traditional index mutual funds over time. We also posted data from ETF researcher Brad
Tuesday, May 07, 2002
S&P to Launch Hedge Fund Index
There seems to be an index for just about anything these days, so why not a benchmark for hedge funds? Standard & Poor's said it is set to launch an index that seeks to tame this unique asset class. The new index will be made up of 40 funds broken into thr
Monday, May 06, 2002
ETF Experts Look at Tax Efficiency
One of the most compelling reasons for investing in exchange-traded funds is their potential heightened tax efficiency relative to traditional index mutual funds. Although most ETFs have a relatively short amount of history behind them, some researchers ar
Sunday, May 05, 2002
Index Spotlight: Russell Style Indexes
Recently we looked at the performance disparity between two small-cap blend indexes: the S&P SmallCap 600 and the Russell 2000. We found that subtleties in index methodology can lead to different results in indexes designed to track similar market segments
Tuesday, April 30, 2002
Capital Asset Pricing Model
If Bill Sharpe’s first thesis had been accepted, the world of finance might look a lot different today. Fortunately, after the paper was rejected as so uninteresting that there “was absolutely no thesis there," Sharpe was introduced to Harry Markowitz. Und
Tuesday, April 30, 2002
Diversification, Low Portfolio Turnover Key to Tax-Efficient Investing
This is the second article in a two-part series on tax-efficient investing. In the following interview, Glenn S. Freed, Ph.D., vice president of tax-managed investment services at Dimensional Fund Advisors in Santa Monica, CA, USA, discusses equity strateg
Sunday, April 28, 2002
Index Spotlight: Fortune 500
As passive investing continues to catch on with mainstream investors, understanding the differences between equity indexes is becoming critical for many. Benchmarks that are highly correlated and similar on the surface can oftentimes behave very differentl
Thursday, April 25, 2002
New 12-step program for indexers
Recovery for timing and trading addicts: 12-step program for investing in index funds
Tuesday, April 23, 2002
Small Growth Editors' Picks
Loved by active managers and shunned by indexers, the small-cap growth sector nonetheless has a handful of excellent index fund vehicles.
Tuesday, April 23, 2002
Small-Cap Value Editors' Picks
Many of the cleverest indexers favor heavy weighting of the small-cap value sector. Our favorites include the following. Click on any fund name for more details, the funds are not listed in order of preference:
Tuesday, April 23, 2002
Large Blend Editors' Picks
For large blend, we suggest the following funds that offer both value and growth. Most are S&P 500 funds. Click on any fund name for more details, the funds are not listed in order of preference:
Tuesday, April 23, 2002
Large Growth Editors' Picks
Indexfunds.com's favorites funds and ETFs for the large growth category are as follows. Click on any fund name for more details, the funds are not listed in order of preference::
Tuesday, April 23, 2002
Mid-Cap Value Editors' Picks
Recommended mid-cap value funds mirror their mid-cap growth siblings. Click on any fund name for more details, the funds are not listed in order of preference:
Sunday, April 21, 2002
Epitaph for a Doomed Fund
Indexers often talk about "seeding and weeding" of funds in the abstract, which does not always convey the reality of the wreckage created by these practices. Seeding is the frequent launch of new active funds in hopes that a few will shine, and weeding wh
Thursday, April 18, 2002
Dividends and ETFs
The structure of an exchange-traded fund can influence its returns, especially when it comes to dividends that companies pass on to shareholders. For example, SPDR 500, by far the largest ETF, is a unit investment trust (UIT). This type of structure distri
Thursday, April 18, 2002
Select Sector SPDR Changes
ETF investors should know that a big rebalancing is on the horizon for the Select Sector SPDRs. On June 24 the nine Select Sector SPDRs will rebalance to look more like the ten Global Industry Classification Standard (GICS) sector definitions. GICS is a se
Wednesday, April 17, 2002
Optimized Sampling in Vanguard's Total Stock Market Index Fund
Recently we discussed why optimized sampling is critical to the managers of the iShares MSCI EAFE, an exchange-traded fund that covers a broad international index.
Tuesday, April 16, 2002
Small-Cap Blend Editors' Picks
Small-cap blend funds are a favorite way to diversify a portfolio heavy with S&P stocks. Some of our favorites are as follows. Click on any fund name for more details, the funds are not listed in order of preference:
Tuesday, April 16, 2002
Editors' Picks - US Total Market
We believe it is self-evident that portfolios should start with the domestic total market fund for that portion of the portfolio that is intended to mirror, for the long-term, the total market on a capitalization-weighted basis. We discourage slicing and d
Tuesday, April 16, 2002
Large Value Editors' Picks
Indexfunds.com preferred large value funds are as follows. Click on any fund name for more details, the funds are not listed in order of preference:
Tuesday, April 16, 2002
Mid-Cap Blend Editors' Picks
Indexfunds.com's preferred mid-cap blend funds are as follows. Click on any fund name for more details, the funds are not listed in order of preference:
Tuesday, April 16, 2002
Mid-Cap Growth Editors' Picks
Indexfunds.com suggests the following mid-cap growth funds.
Tuesday, April 16, 2002
Editors' Index Fund Picks, by Asset Class
We at IndexFunds.com feel it is high time we begin to separate the wheat from the chaff. With some firms charging 4% loads and 1% annual fees on S&P 500 index funds, there is a penalty for not choosing carefully.
Monday, April 15, 2002
Interview with Morningstar Fund Analyst Scott Cooley
Scott Cooley is a senior mutual fund analyst with Morningstar. He recently sat down with us to chat about valuations, diversification, and the importance of understanding index methodology.
Monday, April 15, 2002
Small-Caps are Hot, but Indexes Diverge
Small- and mid-cap stocks outperformed their larger peers in 2001 and so far in 2002.
Thursday, April 11, 2002
Does Consistency of Investment Style Impact Persistence of Performance?
The Holy Grail of investing is to develop a methodology that enables an individual to identify, in advance, the top-performing mutual funds. Unfortunately, while it is always easy to identify the top performers after the fact (which is what Morningstar and
Wednesday, April 10, 2002
No Entry or Exit Fees: Another advantage of ETFs
Some critics of exchange-traded funds (ETFs) say you can get the same cost and tax advantages by using conventional index funds, especially at Vanguard. Long the king of index funds, Vanguard has about 24 of them, which they manage at extremely low cost. A
Wednesday, April 10, 2002
UBS Asset Management Licenses Morningstar Indexes
Long known as a sideline mutual fund tracker and commentator, Morningstar is set to enter the industry as an active participant in the role of index licensor. UBS Global Asset Management said today that it will be the first fund company to license at least
Sunday, April 07, 2002
New Generation Of Tax Managed Funds
A third generation of tax managed index funds adds dividend management to capital gains management, enhancing the already formidable tax advantages that passive funds offer to investors. These new funds take tax efficiency to a new level.
Wednesday, April 03, 2002
Optimizing Indexed Portfolios
In many cases, holding every stock in an index isn't cost effective. One reason is that some thinly traded securities, such as small-cap or international stocks, are illiquid and carry higher transaction costs and wider bid-ask spreads. Therefore, index fu
Wednesday, April 03, 2002
A Chat with a Socially Responsible Fund Manager
Steve Dillenburg is the lead manager of the Summit Total Social Impact (SATSX) fund, an offering that is truly unique in the socially responsible fund world. The TSI fund invests in all of the stocks in the S&P 500, but it weights the companies differently
Tuesday, April 02, 2002
Another Look at ETF Premium/Discounts and Spreads
As we noted in a previous article, the liquidity of an exchange-traded fund is not always best measured by the historical trading volume of the fund. A better gauge of an ETF's liquidity is the liquidity of the underlying stocks in the index.
Sunday, March 31, 2002
March Wrap-Up
The S&P 500 inched slightly forward in the first quarter of 2002, while small-cap and value indexes moved ahead of the pack. On the other hand, most growth indexes across market capitalizations are in the red so far this year.
Sunday, March 31, 2002
The Dimensions of Stock Returns: 2002 Update
Based on the limited amount of data available, size and value effects also appear in emerging markets. The IFC Investables Total Return Index represents a portfolio of tradable stocks in emerging markets countries that non-resident investors are permitted
Tuesday, March 26, 2002
Assets Flood into Russell-Indexed Funds
It may be a stock picker's market, but staid index funds have been attracting their fair share of mutual fund assets.
Monday, March 25, 2002
Morningstar Broadens Style Box Methodology
Morningstar, the Chicago-headquartered fund tracker, said it is updating the methodology it uses to pigeonhole mutual funds in its popular style boxes. Like passive index funds, style boxes are a tool long favored by institutional investors that have gone
Tuesday, March 19, 2002
Clearing Up an ETF Liquidity Myth
We thought it was time to put a common misconception on exchange-traded fund liquidity to rest. Some investors appear to believe that the liquidity of an ETF is dependent on the fund's average trading volume, or the number of shares traded per day. However
Sunday, March 17, 2002
What Makes A Good Mutual Fund?
As you build your portfolio, once you have decided on your asset allocation between stocks and bonds, and then picked your investment categories within the equity markets, it's time to select the mutual fund for each category. With over 7,000 domestic equi
Thursday, March 14, 2002
Morningstar Study Confirms Virtues of Buy-and-Hold in Bear Market
Owners of boring diversified portfolios may have found it difficult to resist dabbling in tech stocks during the dot-com craze of yesteryear. Now, having lived through the painful bear market of the last 12 months, many investors are wondering if some nift
Tuesday, March 12, 2002
Big Board to Trade ETFs and HOLDRs Under UTP
The New York Stock Exchange said it will soon begin trading 17 HOLDRs and 10 exchange-traded funds on the basis of unlisted trading privileges (UTP). All 27 of these funds are listed on the American Stock Exchange, and the move represents the second time t
Monday, March 11, 2002
Does Indexing Affect Stock Prices?
Index mutual funds have become the villains of an investment soap opera. Active managers have been blaming their underperformance on S&P 500 Index funds. The theory goes like this: money pours into the index funds because of the dissatisfaction with the un
Monday, March 11, 2002
Small Investors Frustrated by AMEX ETF Trading Glitch
Some individual investors are reporting difficulties purchasing small odd lots of exchange-traded fund shares using limit orders on the American Stock Exchange. Odd-lot limits refer to priced orders for less than the unit of a trade (typically less than 10
Thursday, March 07, 2002
Nuveen's Gary Gastineau Talks About ETFs, Silent Indexes, and His New Book
Gary Gastineau is a managing director at Nuveen Investments, where he is responsible for the development and introduction of Nuveen's new open-end exchange-traded funds. He penned a book that was recently released entitled The Exchange-Traded Funds Manual.
Wednesday, March 06, 2002
Ten-Year Risk and Return of Several Popular Indexes
Asset allocation is certainly no simple task, but it's a little easier for passive investors as far as choosing funds. The reason is that indexers aren't concerned with finding the best manager in an asset class - they simply invest in the index fund or ET
Monday, March 04, 2002
Ten-Year Risk and Return of Equity Asset Classes by Index
Most of the experts will tell you that a diversified equity portfolio is comprised of funds from the various asset classes, which are separated in terms of size and style. The idea is to build a broad base of funds that will hold up over the long haul and
Sunday, March 03, 2002
Stocks, Bonds and REITs
Investors have been considering real estate as a useful portfolio component for quite a while. Recently I saw the following quote in Roger Gibson's book, Asset Allocation: Balancing Financial Risk: "Let every man divide his money into three parts, and inve
Friday, March 01, 2002
April Wrap-Up
Here's how major equity indexes fared in April 2002, broken down by index provider:
Thursday, February 28, 2002
February Major Index Returns
The Dow Jones Industrial Average was in the black for the month of February. Internationally, the Dow Jones indexes that cover world and European markets were down, while Asia closed up in February.
Wednesday, February 27, 2002
Back to Boot Camp: Ben Graham's Take on Mutual Funds
So we've got the whole Enron mess clogging up the headlines. John Bogle says things are so bad that the mutual fund industry, which controls a majority of stock in America's corporations, must break its traditional silence and actively speak out on corpora
Tuesday, February 26, 2002
FTSE and HSI Team Up to Launch Asian Equity Indexes
Index providers FTSE and Hang Seng Indexes (HSI) International are getting together to launch a broad index that tracks the Asian economy (minus Japan), as well as sector indexes that cover the area. The new benchmarks will go live tomorrow.
Tuesday, February 26, 2002
Morningstar Study Reinforces the Importance of Fund Costs
Chicago fund-tracker Morningstar wrapped up a study that examines the importance of fund costs on an investor's bottom line. Although the study looked only at actively managed domestic equity funds, the results should provide further encouragement to cost-
Sunday, February 24, 2002
State Street and Unico to Introduce ETFs in Germany
In a nod to the growing popularity of exchange-traded funds in Europe, Frankfurt-based Unico Asset Management announced that Boston-headquartered indexing behemoth State Street Global Advisors will manage and service seven new Unico i-tracker ETFs.
Thursday, February 21, 2002
Websites Roll Out More Snazzy Tools
With good reason, all the talking heads are buzzing about asset allocation and diversification these days, and more Internet tools geared to do-it-yourself investors are cropping up. Three new gizmos of interest made their debut today, so let's take a brie
Wednesday, February 20, 2002
Bogle Calls for Federation of Long-Term Investors
Like Woodrow Wilson laying out his vision of a League of Nations after World War I, Vanguard founder John C. Bogle has called for a "Federation of Long-Term Investors" in the wake of the late 1990s speculative bubble, Enron, and a crisis in American corpor
Tuesday, February 19, 2002
HOLDRs Creation and Redemption Fees Temporarily Reduced
The American Stock Exchange today sent out a notice that the Bank of New York has instituted a new fee structure for the issuance and cancellation of all HOLDRs. Bank of NY is temporarily waiving all of the issuance fees for HOLDRs, while the cancellation
Monday, February 18, 2002
News Roundup
The Vanguard Group today launched the Single 5 fixed annuity, which will be underwritten by Jefferson Pilot LifeAmerica Insurance Company. The new annuity offers a guaranteed fixed rate of return over the first five years and annual fixed interest rates af
Wednesday, February 13, 2002
New Study Examines Domestic, International ETF Premiums and Discounts
Unlike traditional open-ended mutual funds, exchange-traded funds are priced continuously throughout the day, and sometimes premiums and discounts arise relative to the net asset value (NAV) of the underlying portfolio. Many cautious investors have cited t
Tuesday, February 12, 2002
KLD and Nasdaq Launch New Socially Responsible Index
Think Nasdaq "cubes" for investors with a conscience. Boston-based KLD Research & Analytics and the Nasdaq stock market introduced a new socially responsible index of companies trading on the tech-heavy exchange that lists over 4,100 securities. The new gr
Monday, February 11, 2002
S&P Partners with Two Foreign Exchanges to Launch Co-Branded Indexes
Index provider Standard & Poor's is looking to expand its strong domestic brand name overseas. The New York-based firm recently announced partnerships with two recognized international equity exchanges: Hong Kong Exchanges and Clearing Limited (HKEx) and t
Sunday, February 10, 2002
Explaining The Value Premium
The historical evidence is that there is a very strong and persistent value premium. From 1964 to 2000 large value stocks outperformed large growth stocks 14.5 percent to 11.1 percent, and small value stocks outperformed small growth stocks 16.6 percent to
Thursday, February 07, 2002
A Possible Antidote to Index Front-Runners: Secret Indexes
One of the biggest knocks against index funds is that they foster the so-called "index effect." This occurs when a stock is added to or removed from a well-known index like the S&P 500 or Russell 2000, and it is costly to investors. The company that is bei
Monday, February 04, 2002
New Survey Examines Investor Tax and Diversification Savvy
Boston-based Eaton Vance released a lengthy survey today that looks at, among other things, how knowledgeable investors are about taxes and the importance of a diversified portfolio.
Sunday, February 03, 2002
News Roundup
A new study by Lipper estimates mutual fund shareholders coughed up $11 billion in shareholder-servicing expenses in 2001. According to Lipper, the average shareholder pays 2.8% of assets for services like online research tools, telephone representative se
Wednesday, January 30, 2002
Despite Legal Setbacks, 2001 Another Strong Year for Vanguard
Monday, January 28, 2002
News Roundup: Latest ETF Launches, New Vanguard Online Tools
The iShares FTSE Eurotop 100 began trading yesterday on the London Stock Exchange. The exchange-traded fund, which has an expense ratio of 0.50%, holds the largest 100 companies and protects United Kingdom shareholders from damaging currency transaction co
Sunday, January 27, 2002
Industry Responds to SEC Request for Comment on Active ETFs
Wednesday, January 23, 2002
Investors Shy Away from Stock Funds in 2001 Despite Record Mutual Fund Inflows
Mutual funds enjoyed a banner year for inflows in 2001, taking in $434.5 billion last year, according to estimates from fund-tracker Lipper. However, just $33.6 billion of that flowed into equity mutual funds as investors shunned a stock market that posted
Monday, January 21, 2002
Active Fund Trading Costs Remain High
Many individual investors believe that professionally managed funds have a trading cost advantage over them, but this is not the case. A recent study suggests that smaller volume traders have gained the most from recently shrinking commissions and smaller
Thursday, January 17, 2002
News Roundup: 2001 ETF Assets, Vanguard Telephone Exchanges, Dow CDs
Exchange-traded fund assets grew significantly in 2001, according to year-end statistics. Worldwide assets ballooned to $103.2 billion, an increase of 39% from the previous year. On the domestic front, U.S.-based ETF assets jumped 27% from last year to $83
Tuesday, January 15, 2002
S&P Combines Small- and Mid-Caps in New Index
Index provider Standard & Poor's yesterday launched the new S&P 1000 index, which folds together the S&P MidCap 400 and the S&P SmallCap 600.
Monday, January 14, 2002
An ETF Cheat Sheet for Major Domestic Stock Categories
Exchange-traded funds (ETFs) make great tools for building a a reasonably diversified portfolio of U.S. stocks on the cheap, particularly for those making lump sum investments. However, with 102 domestic ETFs trading at last count, some investors may feel
Wednesday, January 09, 2002
SEC Reviewing Actively Managed ETFs
Not one of the currently 102 exchange-traded funds (ETFs) listed in the United States holding over $70 billion of assets in their coffers is actively traded. All are linked to equity benchmarks from the popular index providers such as Dow Jones, Russell, a
Tuesday, January 08, 2002
News Roundup: 1st Indian ETF, Dow 2001 Data, CBOT-Dow Alliance
India's Benchmark Asset Management Company yesterday introduced the country's first exchange-traded fund (ETF) based on Standard and Poor's broad CNX Nifty Index. The new stock basket will be traded on the Capital Market segment of National Stock Exchange,
Monday, January 07, 2002
Index Changes Getting Harder to Exploit
In the current environment, changes in indexes appear to be less vulnerable to profit-taking attacks by active traders than in the past.
Thursday, January 03, 2002
Vanguard Extended Market ETF Launches
Vanguard Extended Market VIPERs, the exchange-traded fund to track the Wilshire 4500 Completion Index, will begin trading on January 4, 2002, on the American Stock Exchange under the symbol VXF. Vanguard Extended Market VIPERs (for Vanguard Index Participa
Thursday, January 03, 2002
Mind Your Q's
By far the most popular exchange traded fund (ETF) is the one that tracks the Nasdaq-100 Index, symbol QQQ. It has been this way since the Qs made their first appearance on March 10, 1999. On that day alone the assets grew from an asset base of about $15 m
Tuesday, January 01, 2002
Never In Doubt, Often Wrong
Economists, if they are smart, learn to never make forecasts, especially about the future. If they have to make a forecast, they learn to never give a number. And, if they have to give a number, they learn to never give a date. In that way they can never b
Tuesday, January 01, 2002
Investors can't beat market, scholar says
Nobel winner says individuals wouldn't necessarily do well with privatized Social Security.
Tuesday, January 01, 2002
Investors can't beat market, scholar says
Nobel winner says individuals wouldn't necessarily do well with privatized Social Security.
Sunday, December 30, 2001
News Roundup: Amex and Bank of New York
Investors who use options to hedge portfolio risk got some welcome new tools for the chest. This week the American Stock Exchange (AMEX) began trading options on six iShares managed by Barclays Global Investors tied to the following indexes:
Saturday, December 22, 2001
Index Tracking is a Secondary Goal
As investors examine year-end performances of their index funds, one measure they should not focus on too closely is tracking error. Keeping a portfolio reasonably close to its intended index is desirable, but experts caution against zealous efforts to mim
Sunday, December 16, 2001
Morningstar to Launch New Indexes
Morningstar, Inc., plans to launch 16 new indexes in 2002 based on the firm's Style Box methodology.
Sunday, December 16, 2001
News Roundup: Nasdaq ETF; Barclays & Vanguard Distributions
The Nasdaq Exchange is looking to capitalize on the popularity of the Nasdaq-100 Tracking Stock (QQQ), an exchange-traded fund listed on the American Stock Exchange (AMEX). Nasdaq has plans to launch its own ETF based on the Nasdaq Composite Index, accordi
Wednesday, December 12, 2001
Glimpse of "Convergence to Efficiency"
A new study "Evidence on the Speed of Convergence to Market Efficiency" by Prof. Richard Roll of UCLA and colleagues demonstrates just how quickly competition squeezes out easy profits and offers glimpses of the complexity of equity markets.
Monday, December 10, 2001
Tax Loss Selling Using Exchange Traded Funds
Tax loss selling has been an effective tax management tool used by savvy investors and portfolio managers for years. The concept is quite simple. You sell investment(s) that are in a loss position, and apply those realized losses against realized gains, th
Sunday, December 09, 2001
From Our Canadian Bureau: Tough Year Creates Planning Opportunity
Stock markets all over the globe have fallen off a cliff so far this year - and dragged many investors along for the ride. Canadian stocks have shed about 21 per cent of their value, while U.S. and overseas stocks have sunk 14 and 19 per cent, respectively
Thursday, December 06, 2001
Vanguard Issues Updated Capital Gain Distribution Estimates
The Vanguard Group released updated realized capital gain figures today for its funds to assist investors with year-end tax and investment planning. The firm expects that 70% of its funds (57 funds in all) will not make capital gain distributions for 2001.
Thursday, December 06, 2001
The Enron Debacle: Lessons To Be Learned
In December 2000, with its stock trading at a peak of $85 per share, Enron had a market capitalization of over $60 billion, making it one of the largest U.S. companies. Less than one year later, with the stock trading at well under $1 per share, the compan
Tuesday, December 04, 2001
Bogle Cautions Indexers on ETF Speculation
Vanguard's founder denounced the speculative appeal of exchange traded funds before the largest annual US gathering of indexing faithful, who took the message to heart but felt that it understated how speculative interest benefits the long-term investor.
Friday, November 30, 2001
Explaining Stock Returns: A Literature Survey
Daniel and Titman (1997) doubt the risk-based explanation. They contend that it is "characteristics, not covariances," that produce return dispersion. For example, the risk-based story says that high BtM stocks have high average returns because they are se
Friday, November 30, 2001
The Error Term
Both cases have the same factor exposures and the same expected returns as the market. Cases 1 and 2, however, have significantly higher after-tax expected returns, especially in periods where dividend yields are high. In 1991, for instance, simulated Case
Tuesday, November 27, 2001
Being Socially Responsible All The Rage
Assets in socially responsible funds have continued to rise dramatically. According to a new report by the Social Investment Forum, assets under management in socially screened portfolios have topped $2 trillion. In the past two years, socially responsible
Tuesday, November 20, 2001
ETFs for the Buy-and-Hold Investor
The buy-and-hold investor has as much to gain from ETFs as anyone. While media hoopla has focused on day traders using ETF, in reality ETFs' greatest strengths lie in their long-term features. Especially when purchasing an index-oriented product, over time
Monday, November 19, 2001
Risk and Expected Return
The last half of the twentieth century was a golden era for US equity investors. From 1950 through 1999 the S&P 500 Index produced annualized returns of 13.6% per annum, or a real rate of 9.2% per annum. Even more impressive are the returns of the last qua
Friday, November 16, 2001
Forbes Recognizes IndexFunds.com and ETFzone as Best of Web
Both the IndexFunds.com site and its ETFzone were awarded Best of the Web, with the IndexFunds.com site finishing 4th out of 20 sites in the Fund Selection category and the ETFzone also being awarded Best of the Web in the Exchange-Traded Fund category. Th
Thursday, November 15, 2001
iShares Global Sector Funds hit the Market
iShares continued its enthusiastic global expansion with the launch of the world's first global sector funds. The funds began trading today (11/16/2001) and cover global technology, telecom, energy, financials and healthcare sectors. They are based on Stan
Thursday, November 15, 2001
iShares Make Strong Gains as VIPERs Crack $1 Billion
ETF assets soared in the previous 2 weeks in a strengthening market that was coupled with strong investor interest in ETFs. The iShares continued their recent boom, with all of the top iShares funds enjoying significant gains. iShare's breakthrough 35 bp (
Tuesday, November 13, 2001
The Road Less Travelled
As they begin their journey, investors are faced with an immediate fork in the road-the choice between an active and a passive management strategy. Given the substantial body of evidence it seems clear that passive investing is the strategy most likely to
Thursday, November 08, 2001
ETF Regulatory and Tax Complications
Many of the early developers of ETFs say that it took a miraculous convergence of determination and circumstance to ultimately garner the approval of the SEC and get the new products off the ground. The basic structure of ETFs runs counter to some importan
Thursday, November 08, 2001
Internet Trader - Fund managers and pond life
So should you assign some of your money to fund managers?
Wednesday, November 07, 2001
The Societal Risk Premium
Financial economists like to talk about the risk-free rate: basically, the time value of money sitting in a perfectly safe vehicle. From an historical perspective per se, the very use of the term is fascinating. After all, it implies a society that is stro
Tuesday, November 06, 2001
Let The Commenting Begin
The SEC today announced the long-awaited issuance of its concept release on actively managed exchange-traded funds (ETFs). Actively-managed ETFs increasingly threaten to invade the realm of ETFs, a space presently occupied only by index funds. The AMEX did
Monday, November 05, 2001
Fed Rates Lowered by Another Half Percent
Reacting to an economy that has slid into recession, the Fed lowered interest rates by another 50 basis points (0.50%) to 2%. Stocks climbed on the news. The Fed rates are now at a 40-year low. The move market the first time the rate had slid as low as 2%
Thursday, November 01, 2001
As VIPERs Assets Soar, Vanguard Suffers Another Legal Setback
Even as the total market VIPERs ETF offering from Vanguard drew a flood of new assets, Vanguard suffered a legal defeat to Standard & Poor's that was described by a Vanguard spokesman as "final."
Monday, October 29, 2001
Scratching the Surface of Socially Responsible Index Funds
National tragedies like the events of 9/11/01 inevitably cause people to reexamine values, and part of this process may include taking a fresh look at your portfolio.
Thursday, October 25, 2001
Barclays Introduces First Natural Resource ETF
Barclays Global Investors began trading the iShares Goldman Sachs Natural Resources Exchange Traded Fund (ticker: IGE), the first ETF of its kind. The fund tracks the Goldman Sachs Natural Resources index, a market capitalization-weighted index of 112 stoc
Thursday, October 25, 2001
Bogle Speaks!
John Bogle fans were treated to classic indexing discourse from the great pioneer of indexing at the recent AXA Rosenberg investor conference in Boston.
Tuesday, October 23, 2001
S&P Includes REITs and Amex Adds Options
Standard & Poor's this month added several Real Estate Investment Trusts (REITs) to its US indexes for the first time. The firm recently concluded that REITs have become operating companies driving US economic activity, are no longer passive investment hol
Sunday, October 21, 2001
Vanguard Debuts Term Life, Private Equities
The Vanguard Group expanded its line of financial services recently with term life insurance and private equity offerings offered only to its clientele as part of its strategy to offer one-stop shopping for financial services.
Wednesday, October 17, 2001
Some Germans Stock Up on Index Certificates,
In the last year, when ETFs came to Germany, for us it didn't make sense to have index certificates. ETFs are better because there's more liquidity, a much smaller spread, and they're tradeable every day. There are arbitragers who play ETFs against futures
Thursday, October 11, 2001
History in Perspective - After the Storm
The stock market has recovered the more than $1 trillion in lost market cap value it had lost since the September 11th attacks. Despite the encouraging rally, many investors are understandably shaken by the terrorist attacks and a future clouded with uncer
Wednesday, October 10, 2001
Financial Advisors Defect to Indexing
Financial advisor firms have found it hard to transition from actively managed, commissionable products to indexed, fee-based services, but another important defection to the indexing corner recently took place.
Tuesday, October 09, 2001
Class Action Suit Filed Against Merrill Lynch HOLDRs
Investors who got burned by the dot-com bust may have a chance to reclaim some of their lost money, even if the tech rebound many of them are holding out for fails to materialize.
Monday, October 08, 2001
On the Lighter Side
"There are three kinds of people in the world. Those who can count and those who can't!." - J.R. Dicks... Financial Advice in Tough Times
Thursday, October 04, 2001
Passive Investing Trends:
Index funds are on the rise. Assets flowing into index mutual funds have been rapidly growing both in absolute terms and relative to inflows into actively-managed funds. The million-dollar question is whether these inflows have resulted from investors seei
Wednesday, October 03, 2001
From our European Bureau: A Discussion With Rainer Riess of Deutsche B�rse AG
Exchange-traded funds have experienced exponential growth among both retail and institutional investors in Europe, and we expect this to continue. They are a cost-effective addition to mututal funds, and we expect them to grow in significance. -Rainer Ries
Monday, October 01, 2001
Federal Reserve Rates at 39-Year Low
The Federal Reserve today lowered the Fed Funds rate to a Japanesque 2.5%. The announcement came as consumer confidence plummeted and the economy continued to show signs of weakness. The Fed rate is the lowest it has been since 1962.
Thursday, September 27, 2001
How ETFs Manage a Tax-Efficiency Edge over Traditional Mutual Funds
For all the talk that ETFs are more tax-efficient, there's rarely a detailed explanation of exactly why this is so. As a result, many investors do not truly understand the tax benefits and liabilities of ETFs. It's important to emphasize that ETFs are not
Tuesday, September 25, 2001
The American Way of Life
The greatest threat to the American way of life, at this point in time, comes from America. There is no question about the magnitude of the atrocities. There is no justification for the attacks, regardless of the attackers motives. It was an heinous act o
Monday, September 24, 2001
Do You Believe That Your Fortune Is In The Stars?
The brand that has emerged as dominant in the 1990s is not Fidelity, Putnam, or even Merrill Lynch-but instead is Morningstar.[/:Author:] —R. Pozen, The Mutual Fund Business, 1998, p.75 Perhaps the most popular approach to selecting mutual funds is to rel
Sunday, September 23, 2001
From Our Canadian Bureau: Quarterly Distributions on Canadian ETFs
Distribution estimates were announced this week by Barclays Global Investors, State Street Global Advisors, and TD Asset Management for their respective Toronto Stock Exchange traded exchange-traded funds. The table below summarizes the expected distributi
Sunday, September 23, 2001
The ETF vs. Open-End Index Fund Shootout
I have to admit I’ve been dubious about the exchange-traded fund format. I just couldn’t figure out the why of these things, aside from fees, commissions, and sending financial journalists’ kids to private school. My first encounter with them—the WEBS seri
Wednesday, September 19, 2001
Quarterly Distributions From The Vanguard Group
The Vanguard Group declared quarterly distributions from ordinary net income, payable on September 24, 2001, to shareholders of record on September 20, 2001, as follows:
Sunday, September 16, 2001
Panic sellers did not profit on Monday
After watching today's low closing prices, US equity investors who held onto stocks out of patriotism today might have felt a bit foolish. In reality they did just fine. Everyone in the US market got hit today, and selling on the morning the markets reopen
Monday, September 10, 2001
Democracy and Markets under Attack
Attacking a democracy will only make it rally in unity. Attacking a physical icon of capital management will only disperse the administration of capital flows. Americans have rallied defiantly against cowardly attacks on civilians by a hidden group. The U
Saturday, September 08, 2001
From Our Canadian Bureau: Barclays Helps Retirees With New ETF
New Barclays RSP-Eligible EAFE ETF Barclays Global Investors Canada Limited has finally announced the launch of the much anticipated fully RSP-eligible EAFE ETF it has been promising for several months. This offering, originally planned for a February 2001
Tuesday, September 04, 2001
ProFunds Launches Six New Index Funds
Maryland-based fund shop ProFunds yesterday launched six index funds based on the following indexes: S&P Midcap 400, S&P Midcap 400/Barra Value, S&P Midcap 400/Barra Growth, Russell 2000, S&P Smallcap 600/Barra Value, and S&P Smallcap 600/Barra Growth. Th
Friday, August 31, 2001
Overview of "The Small-Cap-Alpha Myth"
Many people are led to believe that active managers can provide a greater advantage and higher value to investors in the small-cap versus large-cap market, thus resulting in a larger alpha. A large alpha infers that the stock or mutual fund has performed b
Friday, August 31, 2001
The Small Cap Alpha Myth
Many people are led to believe that active managers can provide a greater advantage and higher value to investors in the small-cap versus large-cap market, thus resulting in a larger alpha. A large alpha infers that the stock or mutual fund has performed b
Tuesday, August 28, 2001
Barclays Global Investors Launches Japan iShares
Trading of the iShares S&P/TOPIX 150 began today on the Tokyo Stock Exchange. The new exchange-traded fund has an expense ratio of 0.30%.
Sunday, August 26, 2001
ETF Assets Fall in Weak Market
Exchange-traded fund (ETF) assets fell slightly in July, underscoring the current climate of soft equity prices. The slim $40 million decline occurred despite the fact that issued shares exceeded redeemed shares by $2.58 billion, according to Investment Co
Thursday, August 23, 2001
SEC Denies ICI Petition to Regulate Folios
Chalk one up for do-it-yourself investors. The Securities and Exchange Commission (SEC) released a letter yesterday denying an Investment Company Institute (ICI) petition filed in March to regulate online stock baskets, or folios, as mutual funds.
Thursday, August 16, 2001
Barclays Global Investors Launches EAFE iShares
At long last, Barclays Global Investors (BGI) has answered the call of indexers and today launched the new iShares MSCI EAFE exchange-traded fund. Expense ratio: a razor-thin 0.35%.
Thursday, August 09, 2001
From Our European Bureau: Consequences of the American Slowdown on the European Economy and Stock Markets
The slowdown in the United States has caused some notable repercussions on the European continent. There are many reasons for the strong ripple effect, including market correlation, the impact of fully globalized industries, and the lack of pragmatism on t
Sunday, August 05, 2001
The $500 Billion Hedge Fund Folly
Mediocre returns, outrageous fees and a whiff of scandal have not stopped the hedge fund business from enjoying explosive growth in the past decade. Because these investment pools are under no obligation to report their assets or returns to the Securities
Wednesday, August 01, 2001
Three ETFs Begin Trading on Big Board
Three prominent exchange-traded funds (ETFs) began trading on the New York Stock Exchange (NYSE) on Tuesday, July 31 - the Nasdaq-100 Tracking Stock (QQQ), SPDR 500 (SPY), and Diamonds (DIA). They managed to attract 11%, 20%, and 29% of trading for the day
Monday, July 30, 2001
Now You See It, Now You Don't - iShares Make the Move to MSCI Provisional Indexes
Barclays Global Investors (BGI) is doing its best to help investors manage the MSCI switch to float-adjusted indexes, and on Friday it announced it is ahead of schedule. BGI says all 21 of its MSCI-based iShares exchange-traded funds (ETFs) have been rebal
Wednesday, July 25, 2001
How The Price You Pay Impacts Returns
When forecasting investment returns, individuals often make the mistake of simply extrapolating historic returns into the future. In addition, investors make the mistake of “recency.” Bull markets lead investors to expect higher future returns, and bear ma
Tuesday, July 24, 2001
News From the Week
The Vanguard Group said it will jack up the minimum initial investment for its Selected Value Fund from $3,000 to $25,000, effective July 23. Vanguard also indicated that a 1% redemption fee would be assessed to shares redeemed within five years of purchas
Monday, July 23, 2001
Who Wants to Run a Mutual Fund?
I cringe when I hear comparisons between investing and sports, but I can't resist this time. When it comes to stock-picking, we're a nation of Monday morning quarterbacks.
Thursday, July 19, 2001
New iShares Based on Russell Mid-Cap Indexes
Barclays Global Investors launched three iShares on the American Stock Exchange today. The new exchange-traded funds (ETFs) are tied to the Russell Midcap index, Russell Midcap Value index, and Russell Midcap Growth index.
Tuesday, July 17, 2001
AMEX Beefs Up ETF Development
The American Stock Exchange (AMEX) today announced the creation of a new business unit that will specialize in ETF development to leverage its position as a global leader in exchange-traded funds (ETFs). AMEX was instrumental in the development and subsequ
Monday, July 16, 2001
ICI Urges SEC Not to Force More Frequent Fund Disclosures
Investment Company Institute (ICI), the mutual fund industry's trade group, yesterday released a statement outlining why it believes average investors would actually be harmed by more frequent holdings disclosures by mutual funds. Additionally, ICI dropped
Sunday, July 15, 2001
Bank of New York Has ADR Index ETFs in the Works
Many institutional and retail investors like exchange-traded funds (ETFs) for cheap exposure to foreign markets. Bank of NY wants to drive costs down even lower, and has filed an exemptive application with the Securities and Exchange Commission (SEC) to la
Wednesday, July 11, 2001
Three New iShares for Tech Junkies
Barclays Global Investors (BGI) will launch three iShares ETFs tied to the following Goldman Sachs technology indexes: Networking, Semiconductors, and Software. They will begin trading on the American Stock Exchange (AMEX) starting July 13.
Sunday, July 08, 2001
E*Trade Gets Dinged by NASD for Tech Index Fund Ad
Remember those online broker television ads of yesteryear that led you to believe that stock picking was so easy that even ADD-afflicted office punks and altruistic truck drivers could point-and-click their way to fabulous wealth in their spare time? E*Tra
Saturday, June 30, 2001
What Makes an Asset Class?
Sometimes NASDAQ is referred to as an asset class, but it's not. It's an exchange that contains several asset classes. A partial index of NASDAQ stocks might proxy for a tech stock "asset class"—but there's little theoretical reason to think tech stocks ar
Thursday, June 28, 2001
Vanguard Files to Launch Extended Market ETF
Indexing giant Vanguard today filed with the SEC to launch an extended market exchange-traded fund (ETF) tied to the Wilshire 4500 index. As with the recently-released Total Stock Market VIPERs (Vanguard Index Participation Equity Receipts), the extended m
Wednesday, June 27, 2001
NYSE-listed ETF to be Tied to Broad Chinese Index
How's this for a macroeconomic play: short the declining superpower (U.S.A.) and go long on the up-and-comer (China). Until now it hasn't been possible. Coming soon, though, to a broker near you: an NYSE-listed ETF that tracks 25 of the most liquid stocks
Tuesday, June 26, 2001
Paradise Lost? - S&P 500 Gets Ripped
A recent Money magazine article by mutual fund columnist Jason Zweig ("Is the S&P 500 rigged?") has managed to put a fright into at least a few of the investors who have an estimated $1 trillion in index funds pegged to the broad market benchmark. And give
Wednesday, June 20, 2001
From Our Canadian Bureau: iUnits Distributions
Barclays Global Investors (BGI) announced this week estimated distributions for its Canadian based exchange-traded funds (ETFs), known as iUnits. Unitholders of record as of June 27, 2001 will receive the distribution on June 28.
Tuesday, June 19, 2001
From Our Canadian Bureau: Canadian impact of MSCI index changes may be small
MSCI's change in index construction methodology has been well covered by IndexFunds.com's resident experts. In summary, the change in methodology will increase market coverage to about 85% by excluding stock holdings held by governments and company insider
Monday, June 18, 2001
AMEX and Tokyo Exchange to Cross-List ETFs
The American Stock Exchange (AMEX) and the Tokyo Stock Exchange inked a deal today to cross-list and trade U.S. and Japanese exchange-traded funds (ETFs). The alliance is the latest move by AMEX to set up a global trading platform for ETFs. The exchange h
Wednesday, June 13, 2001
Barclays Global Investors to Rebalance MSCI iShares Early
Barclays Global Investors (BGI) says it will rebalance its iShares exchange-traded funds (ETFs) pegged to MSCI indexes by the end of August 2001. MSCI is adjusting its equity indexes for free-float weighting and broader market coverage, and will complete t
Wednesday, June 13, 2001
New Foliofn Tool Allows Advisors to Design and Subscribe Custom Stock Baskets
Most individual investors are at least familiar with online brokers that allow them to design or purchase ready-made baskets of securities. However, one player, Foliofn, is expanding its services to advisors and money managers. The Virginia-based company l
Tuesday, June 12, 2001
S&P Launches Global Sector Indexes in Australia
Standard & Poor's (S&P) will begin live dissemination of real-time global sector indexes in Australia on June 25. S&P will launch 12 sector indexes from the broad Australia S&P/ASX 200 index, which covers approximately 89% of the total market capitalizatio
Monday, June 11, 2001
Brokerage Firm Loses Account Churning Arbitration Despite Profits
A National Association of Securities Dealers (NASD) arbitration panel ruled that a brokerage firm churned an investor's account - even though the account returned a net profit of over $300,000 during an eleven-month period. Attorney James J. Eccleston suc
Thursday, June 07, 2001
From our European Bureau: Is there any interest for Nasdaq Europe on the Continent?
From our European Bureau: Is there any interest for Nasdaq Europe on the Continent?
Thursday, June 07, 2001
Redemption Rates Not a Good Tool for Measuring Mutual Fund Holding Periods
Using mutual fund redemption rates to determine investor holding periods isn't kosher, according to recent research by Investment Company Institute (ICI). The problem with redemption rates, which measure annual fund redemptions as a percentage of average a
Sunday, June 03, 2001
Standard & Poor's to Design Stock Baskets for E*Trade
In a development that underscores the growing popularity of stock baskets offered by online brokers, index provider Standard & Poor's (S&P) has inked a letter of intent with E*Trade to create custom "folios." S&P will create baskets that reflect broad mar
Sunday, June 03, 2001
From our European Bureau: Are European Indexes Investor Friendly?
Exchange-traded funds (ETFs) have really started to take off on the European continent this year. This growth has led parts of the financial community to raise doubts about the pertinence of European indices.
Thursday, May 31, 2001
State Street Launches Amsterdam ETF
An exchange-traded fund (ETF) based on the the AEX Index, a cap-weighted index comprised of 25 leading stocks traded on the Amsterdam Stock Exchange, began trading Wednesday, 5/30/2001. The new ETF, called the streetTRACKS AEX Index ETF, is managed by Stat
Wednesday, May 30, 2001
Cross-Listed Equities Arrive
The Deutsche Boerse and Eurex announced plans to cross-list 200 of the most liquid U.S. equities and derivatives. Trading is scheduled to begin in September on the Xetra platform.
Monday, May 28, 2001
Seven Criteria to Consider When Selecting International Equity Benchmarks
I've heard the analogy that being an indexer is like seeing the world through rose-colored glasses. Passive investors are content to sit back with a broadly-diversified, low-cost portfolio - and maybe an iced tea - and accept market returns. But before th
Monday, May 28, 2001
Russell Enters Socially Responsible Index Market
The Frank Russell Company, the index provider that has over $175 billion invested in funds modeled on its U.S. indexes, is stepping into the world of socially responsible investing.
Thursday, May 24, 2001
Dow Jones and Russell to Perform Annual Index Rebalancing
Dow Jones Indexes today announced that it will release the results of its annual update for the Dow Jones Titans index family on June 1, after the close of U.S. markets. Stocks in the Dow Jones Global Titans 50, the Dow Jones Asian Titans 50, and the Dow
Wednesday, May 23, 2001
From Our Canadian Bureau: New iUnits S&P 500 ETF
After a long delay, Barclays Global Investors officially announced the launch of its much anticipated fully RRSP-eligible exchange-traded fund (ETF) tracking the S&P 500 index. One might wonder why all the fuss, given the wide availability of U.S.-based ET
Sunday, May 20, 2001
From our European Bureau: The Times They Are A-Changin'
From our European Bureau: The Times They Are A-Changin'
Thursday, May 17, 2001
Start Your Engines! - MSCI to Release New Index Constituents
The starting gun is cocked and ready for the biggest overhaul of an equity index series in history. Tomorrow, May 19, at 7:00 a.m. Eastern Daylight Time, Morgan Stanley Capital International (MSCI) will release the constituents of the MSCI Provisional Inde
Wednesday, May 16, 2001
ETF Based on Dow Begins Trading on European Exchange
Dow Jones Indexes announced that it has licensed Paris-based Lyxor Asset Management to issue the first ETF in Europe based on the Dow Jones Industrial Average. The fund began trading today on the Euronext exchange, and has an annual expense ratio of 0.50%.
Wednesday, May 16, 2001
Vanguard Poised to Move on VIPERs Launch
Despite a jarring legal defeat that has left the launch of its S&P 500 VIPERs in doubt, the Vanguard Group intends to move forward in launching its Total Stock Market VIPERs. Vanguard plans to commence trading on its Total Stock Market VIPERs on May 31. Th
Monday, May 14, 2001
Sectors vs. Countries: Does Globalization Mean You Should Change Your Views on Diversification?
Flip through the pages of the Sunday paper's business section and you'll usually be able to pick out the latest fad in portfolio risk reduction - just by reading the ads. Lately, the steady stream of advertisements for utility funds, health-care funds, and
Sunday, May 13, 2001
Vanguard Offers Admiral Shares for Eight More Funds
The Vanguard Group today announced that "Admiral Shares" are now available for eight additional mutual funds within the Vanguard family.
Tuesday, May 08, 2001
Holy Land Gets Its First Index Fund
"Profits in the Land of the Prophets." That's the catchy slogan plastered across ads for the first-ever Israel index fund, Amidex 35, which was launched in June 1999. But can it actually be true? For many investors, Israel is not only a country of Biblic
Tuesday, May 08, 2001
SEC Conducts Online Investor Survey
The Securities and Exchange Commission (SEC) is performing an online survey to learn more about how investors are utilizing the Internet as an information resource when making important investment decisions.
Sunday, May 06, 2001
Vanguard to Implement New Online Tools
Vanguard's online brokerage service is set to include "Consolidated View," a one-stop simple approach where shareholders can manage all their financial assets online. The account aggregation tool was developed by CashEdge, and allows investors to view all
Thursday, May 03, 2001
The Creative and Ever-Changing World of Mutual Fund Advertising
Let me tell you a little story. Once upon a time there was a bright thirty-year old technology fund manager who was featured in Money magazine. His picture was splashed across the cover, and the headline underneath informed you that his fund had racked up
Thursday, May 03, 2001
AMEX and Singapore Exchange Begin Trading Cross-Listed ETFs
The American Stock Exchange (AMEX) and the Singapore Exchange (SGX) today began trading cross-linked exchange-traded funds (ETFs) on SGX Securities Trading, a joint venture company owned equally by the two exchanges.
Tuesday, May 01, 2001
ETFs: A Picture of Concentration - Market Share of Early Pioneers Declines as Product Offerings Expand
Pioneers in any market always maintain a high market share during the first stage of product establishment and proof of viability. Once that viability is proven, however, inevitably other players will follow and the early dominance of the pioneers from a m
Tuesday, May 01, 2001
Japan Gives Green Light On ETFs
Japan has finally given the official go-ahead on exchange-traded funds (ETFs). Exchange-traded funds have experienced explosive growth in the U.S.
Wednesday, April 25, 2001
AXA Investment Managers Steps Into ETF Ring
Three exchange-traded funds (ETFs) based on broad global and regional benchmarks began trading on Euronext yesterday. They are hitched to the following indexes:
Wednesday, April 25, 2001
S&P Prevails - Vanguard Loses Landmark Lawsuit
The judgment is in. Standard & Poor's prevailed over The Vanguard Group in a closely-watched lawsuit. According to a statement released by Standard & Poor's parent company, McGraw Hill Companies, U.S. District Court Judge Alvin K. Hellerstein ruled that S&
Tuesday, April 24, 2001
Why Invest Overseas At All?
Before you buy an international index fund, you might ask whether it makes sense to invest overseas at all. Although this is a complicated question, it seems pretty clear that the increased diversification and opportunity provided by overseas equities argu
Sunday, April 22, 2001
Upcoming Retail HOLDRs Look Familiar
More and more individual investors are recognizing the benefits that exchange-traded funds (ETFs) and HOLDRs offer as a cheap way to gain exposure to different sectors of the economy. However, as with traditional mutual funds, it's important to examine the
Thursday, April 19, 2001
Netfolio: New Kid on the "Do-It-Yourself" Block
When the mutual fund industry's key lobbying organization kicks up a fuss with the SEC about those newfangled investor-managed stock portfolios, you can bet it's because somebody's feeling threatened. Netfolio is the most recent threat.
Thursday, April 19, 2001
FXI Launches New Index for China
More news out of Asia. Yesterday we told you about the Hong Kong exchange announcement to cross-trade exchange-traded funds (ETFs) on May 2, just two days before the Singapore exchange will cross-list ETFs with the American Stock Exchange (AMEX). Additiona
Wednesday, April 18, 2001
ETFs to Cross-Trade in Hong Kong
The American Stock Exchange (AMEX) has taken another step toward its vision of a fungible global trading platform for exchange-traded funds (ETFs). Next stop: Hong Kong.
Tuesday, April 17, 2001
The Expected Return One-Step
After any particularly wrenching period in the markets, I usually get a few calls and messages in the following vein: "You saw how the Nasdaq just got cut off at the knees on no fundamental news… do you still believe that the market is efficient?" To which
Thursday, April 12, 2001
Survivorship Bias
The above headline should be an SEC-required disclosure for advertisements of many mutual funds. The reported returns of many fund families and their funds are often either misrepresentations (intentional or unintentional) of the returns earned by investor
Wednesday, April 11, 2001
Record Numbers of Funds Blown Up in Market Minefield
Yesterday, we told you that Vanguard announced plans to close and liquidate two of its funds. Could this be a harbinger of more funds throwing in the towel in coming months if the down market continues? How bad is it out there? Let's take a look.
Tuesday, April 10, 2001
Vanguard_to_close_and_liquidate_two_funds
The Vanguard Group recently announced the closing and planned liquidation of two funds, and also the re-opening of two funds to new shareholder accounts. On April 6, Vanguard said it would cease accepting new accounts and shareholder purchases for Vanguard
Monday, April 09, 2001
From Our Canadian Bureau: Tax Tips for Fund Investors - T3s are only the beginning
Now that the registered retirement savings plan (RRSP) frenzy is behind us, most of the T3 (see bottom for description of terms) and T5 slips from GICs, stocks, mutual funds, segregated funds, and other pooled investment products should have trickled in by
Sunday, April 08, 2001
Savings on Capital Gains Ease Losses
Many index fund investors can take some comfort this tax season that they are not paying capital gains on funds reflecting lost value. Both Barclays Global Investors and the Vanguard Group report they have not needed to distribute capital gains to investor
Thursday, April 05, 2001
And The Walls Came Tumbling Down - NYSE Seeks Unlisted Trading Privileges for ETFs
Long a virulent opponent of unlisted trading privileges, the New York Stock Exchange (NYSE) has finally given in. The Big Board announced that it would be seeking unlisted trading privileges for the SPDRs S&P 500 fund (SPY), the Nasdaq 100 Trust (QQQ), and
Wednesday, April 04, 2001
AMEX and Singapore Exchange to Cross-List ETFs
The American Stock Exchange (AMEX) and the Singapore Exchange (SGX) today said they will begin listing and trading exchange-traded funds (ETFs) and HOLDRs on SGX Securities Trading starting May 4th.
Monday, April 02, 2001
ETF Trends - Volatile Market Alters the Playing Field
Despite the sharp market downturn, and declining asset values, exchange-traded funds (ETFs) have continued to gain assets. The value of the U.S. total market as measured by the Wilshire 5000 declined in value by 22.05% over the 6-month period from Septembe
Sunday, April 01, 2001
Mutual Fund Tax Bite Can Be Bigger Than Bark
April 16 is nearly upon us. In honor of tax season, we're running an article series to help investors understand how mutual funds are taxed. In this first installment, we examine the basics with a general overview of the subject. Later this week, we'll loo
Sunday, April 01, 2001
S&P 500 Index Changes in March
Recently, we took a not-so-serious look at the prospects for front-running additions to the S&P 500 to exploit the "index effect," where demand can push up a stock's price when it enters an index. This time, let's take a look back and see what happened to
Saturday, March 31, 2001
Index and Enhanced Index Funds
The purpose of including Exhibit 5 is to demonstrate that portfolio management is a sufficiently complicated task even when index funds are used. In some ways, the role of an investment committee is made more difficult, because it has to decide which asset
Thursday, March 29, 2001
Individual Investor Group Launches Large- and Mid-Cap Indexes
Individual Investor Group announced two new additions to the America's Fastest Growing Companies index family: the LargeCap 50 and the MidCap 300. The LargeCap 50 starts off with a base of the 100 largest companies and selects the 50 with the highest earn
Wednesday, March 28, 2001
Front Run The S&P 500: Vanguard Investors, Hedge Your Bets!
In these topsy-turvy days of volatile markets, who knows what's up or down? The Dow could be up 250 today, and down 300 tomorrow. It's a fool's game playing market direction, and every diehard index fund investor knows it. One thing we can count on, thoug
Tuesday, March 27, 2001
Wayne Wagner on How to Become a Millionaire
Wayne Wagner is the co-author of Millionaire, a book with a promise that index fund investing can turn your lunch money into a million bucks given enough patience, time, and discipline. Wagner should know - in the early 1970s he helped Wells Fargo develop
Sunday, March 25, 2001
Breaking Down the Nasdaq 100 This Year - An Autopsy
Thus far, 2001 has been like a train wreck for the technology sector. In true rubberneck form, let's slow down for a second and take a look at the extent of the carnage. Call it a morbid fascination, but new research from the Equity Derivatives Strategy De
Thursday, March 22, 2001
Irrational Pessimism? Examining Trading Volume and Market Momentum
In an article in the October 2000 issue of the Journal of Finance, Charles M.C. Lee and Bhaskaran Swaminathan presented their findings on a study examining whether past returns and past trading volumes had predictive value in terms of future returns. One o
Monday, March 19, 2001
New Technology iShare
A new iShares exchange-traded fund (ETF) began trading on the American Stock Exchange on Monday. The Goldman Sachs Technology Index Fund (trading symbol: IGM) will track the Goldman Sachs Technology Index, and has an expense ratio of 0.50%.
Sunday, March 18, 2001
Active vs. Passive Management for Small-Cap Funds
"Active management works better than passive index funds for small-cap and international funds." This notion is so widespread that it has become conventional wisdom in financial circles. I have never seen much to back it up, and have largely held an agnos
Thursday, March 15, 2001
Swiss Exchange Launches Broad Market ETF
Yesterday the SWX Swiss Exchange announced the launch of an exchange-traded fund (ETF) that tracks the Swiss Market Index. This broad benchmark is a cap-weighted index that contains 29 Swiss blue-chip companies which represent 80% of the total capitalizati
Thursday, March 08, 2001
I Want to Buy an S&P 500 Index Fund . . . Now What?
By far, the index with the most money benchmarked to it is the Standard & Poor's (S&P) 500 Index, with over a trillion dollars. The index is widely regarded as the barometer to measure the performance of large-cap U.S. companies. The stocks within the inde
Monday, March 05, 2001
Vanguard to Offer Free Investment Advice
The Vanguard Group and Financial Engines have inked an alliance that will allow retail investors of Vanguard funds to receive portfolio investment advice at no charge. Vanguard will initially offer the service in the second quarter to participants in emplo
Sunday, March 04, 2001
FTSE to Launch Socially Responsible Benchmarks
FTSE, the index provider jointly owned by the London Stock Exchange and the Financial Times, announced that it plans to launch a new series of indexes for socially responsible investment (SRI). Called the FTSE4Good family, the indexes will go live in June
Thursday, March 01, 2001
Technology Sector Down Over 50% for the Year? Keep Those Tech Indexes Coming!
As of yesterday, the Dow Jones Technology Sector Index was down over 53% for the year, and predicting when the tech sector will actually bottom out seems to be the main hobby of financial writers and pundits these days. Amidst these unhappy times for tech
Tuesday, February 27, 2001
Index Fund Popularity Waning?
"One of the most popular investment products of the 1990s - passively managed index funds that mimic the movements of major market indices - may have reached a peak in their popularity," says a new report by Eaton Vance, a Boston-based investment managemen
Monday, February 26, 2001
MSCI Launches Real-Time Indexes
Morgan Stanley Capital International (MSCI) today launched over 750 global sector, regional, and country indexes that will be updated in real time. The indexes cover developed markets and Asian emerging markets, and will be updated every 60 seconds for 23
Sunday, February 25, 2001
Diversification with Inherent Assets in Mind
Chances are, the successful individual investor keeps these basic ideas in mind for the long haul: be disciplined, save and invest as much as possible, be mindful of taxes, don't get caught up in the latest market mania fashion trend, and keep investments
Thursday, February 22, 2001
Retail Investor Perception of Exchange-Traded Funds
The biggest players in exchange-traded funds, Barclays Global Investors (BGI) and State Street Global Advisors (SSgA), truly believe they've pioneered a tool that's perfect for index investors - low management fees, protection from taxes and turnover, and
Wednesday, February 21, 2001
ETF Net Asset Value Not Always Best Indicator of Short-Term Value
Initially, critics of exchange-traded funds (ETFs) decried their trading at a significant premium/discount to net asset value (NAV), the underlying stock values they represent. This is a problem that regularly plagues closed-end mutual funds, where prices
Tuesday, February 20, 2001
ETF Premium/Discount Misconceptions
Initially, critics of exchange-traded funds (ETFs) decried their trading at a significant premium/discount to net asset value (NAV), the underlying stock values they represent. This is a problem that regularly plagues closed-end mutual funds, where prices
Monday, February 19, 2001
From Our Canadian Bureau: New Canadian ETFs
Yesterday, Barclays Global Investors unveiled the finishing touches on a much-anticipated line of exchange-traded funds (ETFs) for Canadian investors.
Monday, February 19, 2001
New Canadian ETFs
Yesterday, Barclays Global Investors unveiled the finishing touches on a much-anticipated line of exchange-traded funds (ETFs) for Canadian investors.
Thursday, February 15, 2001
Buying Value In ETFs Amidst a Beaten-Down Technology Sector
Yes, the Nasdaq market is down, but here's the multi-trillion dollar question: Is the market down enough? Since its high early in 2000, the Nasdaq 100 Index is down about 50%. Is this correction enough justification for the cuts in sales and estimated earn
Sunday, February 11, 2001
Dow Jones and FTSE Launch Global Sector Indexes
The trend toward global sector investing is picking up steam. Dow Jones Indexes yesterday launched the Dow Jones Sector Titans Indexes, a new set of indexes comprised of global blue-chip companies. The sector indexes in the new family are listed in the ta
Sunday, February 11, 2001
The Next Mutual Fund R(Evolution)?
Too often financial innovations that affect the mutual fund industry are portrayed in a black and white fashion. They are either viewed as just a curious sideshow, or else they are quickly proclaimed to be a fundamental challenge to the health, viability o
Thursday, February 08, 2001
Market Trends and Investor Behavior
It’s quiz time. I have devised the following test of “investment memory.” The period in question is the 30-year period 1970-1999. As you take this little quiz, keep in mind that the last 15 years have probably been among the greatest periods (if not the gr
Wednesday, February 07, 2001
AMEX and Euronext To Cross-List ETFs
Well, ETF trading is going transatlantic. The American Stock Exchange (AMEX) and Euronext have announced plans to cross-list and trade U.S. and international exchange-traded funds (ETFs). Effectively, ETFs that trade on Euronext will soon be available on
Wednesday, January 31, 2001
Wanna Bet?
You see the craziest stuff coming over all these Internet wire services we have today, but this one is truly bizarre - mostly because it's a case of fantasy mimicking reality just a little too closely.
Monday, January 29, 2001
Flurry of Global ETF Launches in Early 2001
2000 was a busy year for exchange-traded fund (ETF) launches and asset growth. According to the American Stock Exchange (AMEX), assets in ETFs listed on the exchange reached $70.3 billion, nearly doubling the 1999 year-end total of $35.9 billion. Also, the
Sunday, January 28, 2001
Dunn’s Law Review: The Life and Times of "Core and Explore"
One of the silliest bits of conventional financial wisdom is the notion that while indexing works well with the efficient U.S. large-cap market, there is benefit from active management in the "less efficient" small-cap and foreign arenas. In fact, Charles
Sunday, January 28, 2001
IndexFunds Speaks with Michael Petronella
Michael Petronella is Managing Director at Dow Jones Indexes. He recently sat down with IndexFunds.com's, Site Editor Jim Wiandt to discuss the history of Dow Jones indexes, the free-float debate, and how Dow Jones plans to construct international country
Wednesday, January 24, 2001
New HOLDRS Allow Investment in Europe's Largest Companies
Europe 2001 HOLDRS began trading on the American Stock Exchange (AMEX) on January 18 under the symbol EKH. With the new HOLDRS, which stands for Holding Company Depository Receipts, investors can own interest in 50 of the largest companies in Europe in ter
Tuesday, January 23, 2001
Vanguard to Offer Admiral Shares on Bond Funds
The Vanguard Group today registered with the Securities and Exchange Commission (SEC) to offer Admiral Shares on 13 taxable and tax-exempt bond funds.
Tuesday, January 23, 2001
ETFs: The Growth Story of 2000
If S&P 500 index funds were the most notable success story from 1996-1999 and technology funds were the talk of the industry in 1998-1999, then their headline-grabbing successors in 2000 were probably index-based exchange-traded funds. After seven years of
Monday, January 22, 2001
Barclays to Launch Nasdaq Biotech Index ETF
Barclays Global Investors (BGI) is planning to launch an iShares Nasdaq Biotechnology Index Fund, an exchange-traded fund (ETF) that will hold all 76 securities in an index that contains companies primarily engaged in biomedical research to develop new tre
Sunday, January 21, 2001
SEC Mandates Disclosure of Mutual Fund After-Tax Returns
The Securities and Exchange Commission (SEC) adopted a rule on Friday that requires fund companies to disclose after-tax returns for 1-, 5-, and 10-year periods in fund prospectuses. The SEC first proposed the new rule in June 2000.
Thursday, January 18, 2001
Comparing Mutual Funds to Different Benchmarks
What a difference two years can make. In 1999, only 33% of mutual funds were able to beat Standard & Poor's (S&P) 500. In the year 2000, over 72% of all mutual funds managed that task. Nearly half of all funds managed to outgain the S&P 600 Small Cap index
Wednesday, January 17, 2001
FRC Study Confirms Investors Chase Fund Returns to Their Detriment
Bad news from Financial Research Corporation: fund investors chase returns like a mule with a carrot dangling in front of its nose - and it's hurting them in the long run.
Tuesday, January 16, 2001
Vanguard Approval in Japan
Vanguard Investments Japan, the Japanese arm of The Vanguard Group, announced that it has been approved for membership in the Japan Securities Dealers Association.
Tuesday, January 16, 2001
MSCI Discusses GICS Shift, Expanding ETF Market
Morgan Stanley Capital International (MSCI) and Standard and Poor's (S&P) recently launched a new index classification system called the Global Industry Classification Standard (GICS). The new system is designed to make investment research and management e
Sunday, January 14, 2001
The Price/Earnings (p/e) Debate
A war has been raging lately on our discussion boards. The debate centers around p/e ratios, and how they are calculated by Morningstar. The issue is important because many investors and financial professionals use the numbers when making decisions. Genera
Tuesday, January 09, 2001
Larry Swedroe Talks About His Latest Book, What Wall Street Doesn't Want You to Know
Larry Swedroe's second book, a straight-up assessment of the true value and effectiveness of active management, is aptly named. In What Wall Street Doesn't Want You to Know, Swedroe examines many of the commonly-held myths concerning stock-picking and mark
Monday, January 08, 2001
S&P Completes Reclassification of U.S. Indexes
Standard and Poor's (S&P) announced that it has finalized the new classification of its U.S. indexes, shifting to the Global Industry Classification Standard (GICS). The new system was developed by S&P and Morgan Stanley Capital International (MSCI) with t
Sunday, January 07, 2001
E*TRADE Launches Two New Index Funds
E*TRADE today announced the launch of two new no-load index funds: the E*TRADE Financial Sector Index Fund and the E*TRADE Russell 2000 Index Fund.
Wednesday, January 03, 2001
From our Canadian Bureau: Templeton Growth Gets New Manager - Again Changing of the Guard A Non-Event
It was just this past summer when Templeton Growth saw its lead management duties handed over from Mark Holowesko to Sean Farrington - just its second manager change in the fund's 46-year history. This week, just a few short months later, it was announced
Tuesday, January 02, 2001
Nuveen to Launch 5 Treasury Index ETFs, Announces Monthly Tax-Free Dividends for Closed-End ETFs
Chicago-based Nuveen Investments announced that it plans to launch the first exchange-traded funds (ETFs) that track U.S. Treasury Indexes. The new ETFs will be called Fixed Income Trust Receipts (FITRs) and will be based on Ryan Treasury Indexes of 1-year
Sunday, December 31, 2000
What Wall Street Doesn't Want You to Know: How You Can Profit from the Indexing Revolution
This book is an excellent follow-up to Larry’s first successful title on index investing, The Only Guide to a Winning Investment Strategy You’ll Ever Need. As in his first book, the author copiously quotes and analyzes the tenants of Modern Portfolio Theor
Sunday, December 31, 2000
Is There Still Value in the Book-to-Market Ratio?
Both of these variables produce more return dispersion than E/P and CF/P, even during the period when BtM is supposed to be less relevant (Figure 5). Unfortunately for investors in value stocks, the return difference went the wrong way during the most rec
Wednesday, December 20, 2000
Enhanced Indexing
There wasn't a lot of emphasis placed on enhanced indexing during the bull market of the 1990s when investors were fed a steady diet of consecutive and unprecedented high yearly returns. However, with the recent stock sell-off, squeezing out those extra pe
Tuesday, December 19, 2000
Do Indexes Influence Markets?
There is mounting evidence that indexes, which theoretically should serve as benchmarks for economic sectors, may actually exert influence on the markets they are designed to track. A growing number of studies are examining whether indexes create or measur
Sunday, December 17, 2000
BGI Announces iShares Year-End Income and Cap Gains Distributions
Listed below are the final classifications of income and capital gains for several domestic iShares exchange-traded funds (ETFs), as released today by Barclays Global Investors (BGI).
Thursday, December 14, 2000
On ETFs - Another View (Post to IndexFunds.com Discussion Board from UwchlanGuy)
First, I want to emphasize that I am a very happy Vanguard investor, and would love to find a hole in this analysis. Or, for it to be right and nudge Vanguard into shaving down the differential that I am seeing.
Monday, December 11, 2000
Trend Toward Global ETFs Continues
Barclays Global Investors (BGI) announced its plans to launch a UK-based exchange-traded fund (ETF) that tracks the new FTSE ExUK 100 Index. The FTSE ExUK 100 Index will be calculated from December 14, and a full list of the constituent companies will be a
Sunday, December 10, 2000
Vanguard Releases Latest Cap Gains Estimates
The Vanguard Group released updated estimates of year-end capital gains distributions for its equity and balanced funds. The estimates are updated through the end of November 2000.
Sunday, December 10, 2000
MSCI to Adjust Indexes for Free-Float
Morgan Stanley Capital International (MSCI) formally announced yesterday that it will adjust all of its equity indexes for free-float, a decision that will most likely trigger billions of dollars in stock turnover globally.
Thursday, December 07, 2000
iShares S&P Global 100 First ETF to List on NYSE
Trading commenced today on the iShares S&P Global 100 exchange-traded fund (ETF). The Global 100 (ticker symbol: IOO) is the first ETF to be listed on the New York Stock Exchange (NYSE).
Wednesday, November 29, 2000
SEC Approves Changes to Merrill Lynch HOLDRS
A ruling handed down by the Securities and Exchange Commission (SEC) should prove to be a boon to HOLDRS investors.
Tuesday, November 28, 2000
Know Your Prospectus
I have to read a fund's "What?" before investing? A mutual fund company must inform you to read their Prospectus before investing, but what is a prospectus?
Tuesday, November 21, 2000
From our Canadian Bureau: BGI Canada Launches First Bond ETFs
Two new bond exchange-traded funds (ETFs) managed by Barclays Global Investors Canada began trading today on the Toronto Stock Exchange (TSE). The two new Canadian ETFs are the iUnits Government of Canada 5-Year Bond Fund (iG5) and the iUnits Government of
Monday, November 20, 2000
World's First Active ETFs Begin Trading in Germany
In a development that would be unthinkable in the United States, the world's first actively-managed ETFs began trading in Germany just three months after DWS Investment filed for approval. Peering through a window that might shed some light on how such fun
Sunday, November 19, 2000
iShares Announces Annual Distributions
iShares, Inc. released distributions paid to shareholders as of 8/31/2000 for its country-specific iShares based on MSCI indexes.
Wednesday, November 15, 2000
World's First Active ETF to be Launched in Germany
The seemingly inevitable has come to pass. IndexFunds.com has learned that the world's first actively-managed exchange-traded funds will soon be launched in Germany.
Monday, November 13, 2000
Vanguard Releases Cap Gains Estimates
The Vanguard Group issued updated estimates of year-end capital gains distributions for its 54 equity and balanced funds.
Sunday, November 12, 2000
SSB Citi Launches New Family of Index Funds
SSB Citi Asset Management Group, the money management division of Citigroup, announced the launch of 11 new index funds. The new offerings are the first no-load index funds ever to be introduced by SSB Citi, which has two other U.S. mutual fund brands - Sm
Wednesday, November 08, 2000
Retiring Early Using Indexing Strategies
On a recent rainy day perfect for book browsing, I found myself cruising the investing and personal finance section of my favorite super-sized 50,000-title Barnes and Noble. Years ago, I developed a rule to help my search for good investment books: ignore
Wednesday, November 08, 2000
From our Canadian Bureau: A Raise for Your Money Manager?
I bet investors take most pieces of mail regarding mutual fund unitholder votes and file them under "G" for garbage. Frankly, oftentimes the issue being voted upon has no material impact on unitholders. However, November 14, 2000 marks an important day for
Tuesday, November 07, 2000
Borsa Italiana Paves the Way for ETFs
Borsa Italiana, the Milan-based stock exchange, announced that it is in at least the planning stages of a move to alter its own regulations to permit the launch of Italy's first exchange-traded funds (ETFs).
Tuesday, November 07, 2000
USAA Investments Launches 3 New Index Funds
"The popularity of the USAA S&P 500 Index Fund demonstrates that there's a place in a balanced portfolio for indexing," said Michael J.C. Roth, President and CEO of USAA Investment Management Company. "The addition of these three index funds will complemen
Monday, November 06, 2000
Dow Jones Global Titans Index to be Calculated with ADR Prices
Dow Jones Indexes announced yesterday that it is using American Depository Receipts (ADRs) listed on the New York Stock Exchange (NYSE) to calculate intra-day real-time values for the Dow Jones Global Titans Index during U.S. trading.
Sunday, November 05, 2000
FRC Study Examines Future of ETFs
With large financial institutions launching an explosion of exchange-traded funds (ETFs) around the globe, some have questioned whether these investment products represent a threat to traditional mutual funds. Can ETFs exact a fundamental change upon the m
Thursday, November 02, 2000
S&P Launches Frontal Attack on Vanguard Vipers
Taking its lawsuit against Vanguard to another level, Standard & Poor's requested that the Securities and Exchange Commission (SEC) hold a public hearing on Vanguard's application to launch its exchange-traded funds (ETFs).
Tuesday, October 31, 2000
Benefits of ETFs Debated at Asset Allocation Seminar
At the recent seminar in San Francisco entitled "Asset Allocation: Theories vs. Realities," representatives from the industry outlined the benefits of using exchanged-traded funds (ETFs) in portfolio management strategies. Many of the institutional investo
Monday, October 30, 2000
First ETF Launched on Chicago Board Options Exchange
The newly-created iShares S&P 100 Index Fund began trading on the Chicago Board Options Exchange (CBOE) on 10/27/2000. The exchange-traded fund (ETF) will be managed by Barclays Global Investors (BGI) and will trade under the CBOE symbol OEF. The iShares S
Wednesday, October 25, 2000
New ETF to be Launched in Japan
The Osaka Securities Exchange (OSE) today inked a license agreement and memorandum of understanding with Dow Jones. The agreement covers the listing of an exchange-traded fund (ETF) based on the Dow Jones Industrial Average. Additionally, the arrangement a
Tuesday, October 24, 2000
From our Canadian Bureau: Tax Proposal in Canada Raises Questions
A controversial Canadian tax proposal has been opened for comment until Sept. 1, and the impact on your portfolio could be hugely negative. Here's the gist of the proposal:
Sunday, October 22, 2000
Salomon Releases ETF Premium/Discount Study
Last Wednesday, 10/18/2000, the Salomon Smith Barney Closed-End Funds Research Group released a supplement to its larger quarterly report, "Fundamentals for Exchange-Traded Funds." As part of the supplement, Salomon analysts conducted a premium/discount st
Thursday, October 19, 2000
Vanguard Releases Expense Ratios for Admiral Shares
On Tuesday, 10/17/2000, the Vanguard Group announced the expense ratios for its new class of Admiral Shares to be released in November. Initially, Vanguard will offer Admiral Shares on seven of its domestic index funds, and has plans to offer Admiral Share
Wednesday, October 18, 2000
Frequently Asked Questions about ETFs
What is an ETF? What are the benefits of using ETFs? Are there any negatives? How can I buy and sell ETFs? How are ETFs created and redeemed? What ETFs are available on the market? How can I use ETFs in managing my portfolio? How much money is in ETFs and
Wednesday, October 18, 2000
State Street to Launch European ETFs Based on MSCI Indexes
Today, State Street Global Advisors (SSgA) announced that it has entered into a license agreement with MSCI to launch exchange-traded funds (ETFs) in Europe based on MSCI indexes. The announcement is the latest move by an asset manager to release ETFs in E
Wednesday, October 18, 2000
J. Parsons Interview
J. Parsons, Director of Sales for U.S. Individual Investor Business at Barclays Global Investors, talks to Jim Wiandt about how exchange-traded funds are traded.
Tuesday, October 17, 2000
Nuveen to Enter ETF Market
On Monday, 10/16/2000, Nuveen Investments announced its plans to launch the first in a series of new exchange-traded funds (ETFs).
Tuesday, October 17, 2000
State Street to Launch First ETF in Singapore
Today, the Singapore Exchange (SGX) announced that it intends to sign a memorandum of understanding with State Street Global Advisors (SSgA) to develop Singapore's first indigenous exchange-traded fund (ETF). According to SGX, the new ETF will list and tra
Monday, October 16, 2000
Barclays Releases Estimates of iShares Capital-Gains Distributions
Barclays Global Investors (BGI) recently released estimated capital-gains distributions for iShares, its exchange-traded funds (ETFs). The distributions were estimated as a percentage of each ETF's total net assets. The highest estimated capital gains dist
Sunday, October 15, 2000
Betting on Sector ETFs in a Highly-Valued Market
As one who sold stocks to investors in the early 1970s, I realize how misleading price/earnings multiples (P/E) can be. Although these multiples have their limitations, P/Es can be useful when making valuations. Still, other valuations should be used in co
Saturday, October 14, 2000
Peter Breen Interview
A relatively new start-up is stepping up against the established names in online investing: E*Trade, Ameritrade, Fidelity, and DLJdirect to name a few. BUYandHOLD.com is targeting the growing ranks of online investors - young couples investing for retireme
Thursday, October 12, 2000
AMEX to Begin Trading Options on iShares
Today, AMEX announced that it will begin trading options on the iShares Russell 1000 Index Fund, an exchange-traded fund (ETF) managed by Barclays Global Investors (BGI). The announcement hails the first time an option will be traded on an ETF that tracks
Wednesday, October 11, 2000
Barclays to Launch UK-based Technology ETF
iShares, a division of Barclays Global Investors (BGI), today announced the launch of a UK-based exchange-traded fund (ETF) called the iFTSE TMT. The new iShares ETF will begin trading on the London Stock Exchange within the extraMARK on Tuesday, 10/17/200
Tuesday, October 10, 2000
State Street Launches ETFs Based on Fortune Indexes
Yesterday, State Street Global Advisors (SSgA) launched two exchange-traded funds (ETFs) based on the FORTUNE 500 and FORTUNE e-50 Indexes. The two funds began trading yesterday on the American Stock Exchange (AMEX) under the ticker symbols FFF (500) and F
Monday, October 09, 2000
Study: U.S. Investors Waste $36 Billion on Wall St. Fees
In 2000, mutual fund investors overpaid Wall Street $36 billion to manage stocks, bonds, and real estate totaling $3.7 trillion. Nearly 1% per year of assets were wasted in unnecessary fees, according to IndexFunds' comprehensive new survey of mutual fund
Wednesday, October 04, 2000
TD Waterhouse Releases 5 New Index Funds
Yesterday, TD Waterhouse Group announced the addition of seven house-brand no-load mutual funds to its list of mutual funds. The new funds will be available only through TD Waterhouse and require a minimum initial investment of $1,000. Five of the seven ne
Sunday, October 01, 2000
From our Canadian Bureau: CIBC and Barclays Roll Out New Index
The pressure to lower fees on Canadian mutual funds and similar products just heated up. Over the past week, nine new index products were introduced covering unique pockets of the world markets not previously available to Canadian indexers.
Saturday, September 30, 2000
The Information in the Term Structure: An Update
Panel A of Table 4 shows that the variable maturity portfolio earns higher average returns than any of the fixed maturity portfolios. This holds for the entire 1965-1999 period as well as the two subperiods. The average return difference for the 1965-1999
Thursday, September 28, 2000
Beware of Year-End Capital Gains Distributions
Ready to buy a mutual fund? STOP! Buying now may increase your taxes!
Wednesday, September 27, 2000
State Street to Launch First Global ETF
Ending Barclays short-lived hegemony in style-based exchange-traded funds (ETFs) and launching the first global ETF, State Street Global Advisors announced the opening of 7 new funds. Continuing its surge into the ETF market, State Street was scheduled to
Monday, September 25, 2000
Gus Fleites Interview
Gus Fleites is a Principal of State Street Global Advisors (SSgA). He is responsible for the development and implementation of exchange-traded funds (ETFs) and offshore investment products. At the 2nd Annual Exchange-Traded Fund & Index Share Forum, Gus sa
Sunday, September 24, 2000
Lee Kranefuss Interview
Lee Kranefuss, CEO of U.S. Individual Investor Business at Barclays Global Investors, recently sat down with IndexFunds.com's Jim Wiandt to discuss the proliferation of iShares and the future of exchange-traded funds (ETFs).
Thursday, September 21, 2000
Barclays to Introduce Tech-Heavy ETF in U.K.
Barclays Global Investors (BGI) announced that it plans to launch a new iShares exchange-traded fund (ETF) similar to U.S. "cubes" (QQQ) in the U.K. John Demaine, Managing Director for Product Development, said BGI has plans "to launch an iShare with a U.K
Thursday, September 21, 2000
Harrowing Tale of a Plunging Euro and Soaring Oil Prices
Fueled by soft European economic performance, soaring oil prices, and uncertainty about its prospects as a currency, the euro has slumped to all-time lows. Initially viewed as an embarrassment to euro diehards, the exchange rate is now causing genuine conc
Tuesday, September 19, 2000
The 2nd Annual Exchange-Traded Fund & Index Share Forum - Exclusive IndexFunds.com Coverage
The Institute for International Research is sponsoring the 2nd Annual Exchange-Traded Fund & Index Share Forum, which will be held on Tuesday, September 26 at The Marriott Financial Center in New York City.
Monday, September 18, 2000
Swiss Exchange to Launch New ETFs
Whew! Working the ETF beat hasn't been easy this past week. Recently my inbox has been full of messages from our editorial staff asking me if I've heard about the latest European exchange to embrace exchange-traded funds (ETFs). State Street Global Advisor
Sunday, September 17, 2000
REITs, Your Home, and the Asset-Allocation Decision
Diversification across asset classes is an important component of an investment plan. Put very simply, diversification reduces risk by not putting all your eggs in one basket.
Thursday, September 14, 2000
State Street's German arm to Launch ETFs
In an interview that was published today on Handelsblatt.com, a Germany-based financial news Web site, the head of State Street's German arm announced that State Street Global Advisors (SSgA) plans to launch nine exchange-traded funds (ETFs) based on Frank
Wednesday, September 13, 2000
Proposed Law to Defer Capital Gains on Funds
Representative Jim Saxton, a New Jersey Republican and Chairman of the Congressional Joint Economic Committee, has introduced significant legislation addressing the taxation of mutual funds. The proposed law, if enacted, would change the tax rules for many
Tuesday, September 12, 2000
State Street to Launch New Australian ETFs
The Australian Stock Exchange (ASX) and State Street Global Advisors (SSgA), the investment management arm of Boston-based State Street Corporation, today announced that they have signed an agreement to develop the first exchange-traded funds (ETFs) availa
Monday, September 11, 2000
Merrill Lynch adds 2 New HOLDRS to the Family
Merrill Lynch recently launched a new Market 2000 HOLDRS (MKH), and has announced that it plans to launch a Software HOLDRS (SWH).
Thursday, September 07, 2000
U.S. Trade Deficit - Good News or Bad News?
The recent government announcement of the record-breaking June 2000 U.S. trade deficit of $30.62 billion was, for me, both good news and bad news.
Wednesday, September 06, 2000
The World is Your Oyster: Authoritative Survey of International Index Funds
One point is not up for debate: global diversification is becoming more elusive, as correlations between American and foreign markets increase. Industries like banking and telecommunications are following each other much more closely than they did a decade
Wednesday, September 06, 2000
Indexing on the Global Stage
Looking for a way to get international exposure without too much risk of getting burned? Though there's no absolutely foolproof investment strategy, some of the biggest names in investing are turning to international index funds. In 1999, according to Pens
Tuesday, September 05, 2000
Whatifi.com Zeroes in on Savvy Young Online Investors
San Francisco-based whatifi.com is urging younger investors to ask themselves, "What if I. . . ?" The new investment site has partnered with Barclays Global Fund Advisors to offer five index funds with an initial minimum investment as low as $100 a month.
Thursday, August 31, 2000
Gus U. Sauter Interview
George U. Sauter, managing director of the Vanguard Core Management group, recently sat down with the indexfunds.com staff to discuss a number of topics - the current performance of Janus Funds, the placement of record cash inflows into the market, competi
Thursday, August 31, 2000
From our Bureau of Panic Peddling
So what happens when the extravagantly back-tested research of two eminent economists strongly suggests that equity returns are in for a long hard road going forward? Should we stay the course, panic and sell, or stock up on canned food and bottled water?
Wednesday, August 30, 2000
Bogle Speaks Out on Social Security
Unfortunately, John Bogle isn't on the ticket for the upcoming 2000 presidential elections, but he would certainly get our vote if he was in the running. Oh well, there's always 2004.
Tuesday, August 29, 2000
Stock Basket Services Make the Picking Cheap
For better or worse, the allure and immediacy of Internet technology has granted investors new freedom and more choices for managing their money. Quick and easy online stock trading has become increasingly popular, and as the ranks of "click-and-buy" inves
Sunday, August 27, 2000
Bogus Press Release Causes Emulex Stock Plunge
In one of the most dramatic hoaxes in stock market history, a bogus press release caused the market value of networking technology provider Emulex to temporarily lose $2 billion on Friday.
Wednesday, August 23, 2000
ETF Update and Complete Listing
Exchange-traded funds (ETFs) have continued their meteoric rise in popularity, with total assets in ETF securities exceeding $47 billion for the week ending 8/18/00, excluding Merrill Lynch's HOLDRs (Source: Wiesenberger).
Tuesday, August 22, 2000
Signs of Life in the Internet Sector
Crash and burn, baby! Who will soon forget that memorable moment of self-immolation for the Nasdaq last Spring? The incineration throughout the trading day of April 4 was proof that for every action, there is an equal and opposite reaction - the Nasdaq she
Monday, August 21, 2000
Bridgeway Social Fund to Join with Calvert
Calvert Group and Bridgeway Capital Management today announced a deal to request shareholder approval for a merger of the Bridgewater Social Responsibility Portfolio into the Calvert Large Cap Growth Fund. According to the terms of the agreement, Calvert w
Sunday, August 20, 2000
Fidelity Giants Holdings Mirror Vanguard
Why do Fidelity's biggest funds tend to track the S&P 500 so closely? A closer look at them shows they hold many of the same stocks in the same amounts.
Sunday, August 20, 2000
Holdings Study: Fidelity Blue Chip Growth vs. Vanguard 500
This table compares amounts of stock held in each fund. At least 58% of the holdings are absolutely identical. Periods during which data was gathered (source: Wiesenberger) do not entirely coincide.
Sunday, August 20, 2000
Holdings Study: Fidelity Magellan vs. Vanguard 500
This table compares amounts of stock held in each fund. At least 65% of the holdings are absolutely identical. Periods during which data was gathered (source: Wiesenberger) do not entirely coincide.
Sunday, August 20, 2000
Holdings Study: Fidelity Growth & Income vs. Vanguard 500
This table compares amounts of stock held in each fund. At least 63% of the holdings are absolutely identical. Periods during which data was gathered (source: Wiesenberger) do not entirely coincide.
Wednesday, August 16, 2000
Janus Funds Decline Sparks Debate
Falling stars, whether celestial or financial, draw intense interest from observers who react variously to them. The recent disappointment of the Janus Funds after years of stellar performance has produced a strong response within the financial community a
Monday, August 14, 2000
New Fund to Track the Dow Jones Islamic Index
Allied Asset Advisors recently launched its new Dow Jones Islamic Index Fund in hopes of drawing Muslim and other morally concerned investors.
Sunday, August 13, 2000
Too Many Cooks in The Kitchen
Brad Barber and Terrance Odean of the Graduate School of Management, University of California at Davis, have done a series of studies on investor behavior and performance. The following summary discusses some of their studies and their main findings.
Wednesday, August 09, 2000
Slice and Dice Primer
I thought it might be instructive to post part of my reply to him here so that newcomers to the debate have a better idea of what we're talking about.
Wednesday, August 09, 2000
Slice and Dice vs. Total Stock Market
Perhaps at the very heart of the schism that divides passive index investors is the slice and dice vs. total stock market debate. Namely, does it make more sense (cents?) to buy the entire market or to divide it into four sectors and buy equal amounts of e
Monday, August 07, 2000
From our Canadian Bureau: The Retirement Fund Shell Game
Think Canada's only known for its hockey players? Well get a load of this hat trick.
Thursday, August 03, 2000
Asset Allocation Is Not Dead
A February article in the Wall Street Journal discussed the end of asset allocation. In the interim, of course, many undiversified investors have gotten a rude awakening.
Wednesday, August 02, 2000
How You Interpret the Data Makes All the Difference
Business Week is a highly regarded publication. Unfortunately, while its reporting of the business news is excellent, the value of its investment advice is often wrongheaded. The reason is that their objective is to sell magazines and gain advertising reve
Tuesday, August 01, 2000
Factor Rotation: Size, Value and Market Correlation
Of all of the tidbits of financial pornography bandied about in the media by market analysts, none is more hackneyed than "rotation": "Well Lou, I think what we saw this week was a rotation out of the cucumber sector and into bagels." This is a fatuous way
Monday, July 31, 2000
Earnings Growth and Stock Returns
Earnings Growth and Stock Returns
Monday, July 31, 2000
Market Volatility and Its Impact on Diversification
In December 1968, a paper by J. Evans and S.H. Archer entitled “Diversification and the Reduction of Dispersion: An Empirical Analysis,” appeared in the Journal of Finance. Its conclusion was that an investor could construct a portfolio containing no more
Sunday, July 30, 2000
Hidden Trading Costs ETF Investors Should Know About
How does a small investor know he is getting the best price when he buys or sells an exchange-traded fund (ETF)? The truth is that brokers may quite legally complete a trade at less-than-optimal prices and pocket the difference, and the investor may never
Friday, July 28, 2000
Magical Run or a Bunch of Hype?
Business Week is a respected bastion of the financial media. Like much of the mainstream media, the magazine has a penchant for publicizing trading successes. In its July 24th issue, BW printed a 4-page analysis of "Inside Wall Street" columnist Gene Marci
Thursday, July 27, 2000
And the Rich Get Richer
Vanguard, the leader in low-fee investment funds, announced Wednesday it will offer a price break on expenses for its long-term investors and those with big money accounts. The new "Admiral" share class could save shareholders 33% in fees.
Tuesday, July 25, 2000
Not ALL Milk and Honey - Index Fund Managers and the Not So Delicate Rebalance
Maybe you thought the average index fund manager had a pretty cushy job. After all, they are not out there in the front line trenches picking off portfolio stocks like the managers of active mutual funds. Talk to an index fund manager, though and he'll tel
Monday, July 24, 2000
Diversifying Internationally - Safe and Sensible
You've got a house, a broad section of the U.S. Market, and some bonds. You think you're diversified? Think again. Without a healthy allotment of international stocks, your porfolio is not as diversified as it should be.
Wednesday, July 19, 2000
NYSE Looks to Challenge American Exchange ETF Hegemony
There are currently 58 exchange-traded funds available to investors. Their combined assets amount to some $47 billion. Every one of them trades on the American Stock Exchange (AMEX). This may soon change. The New York Stock Exchange (NYSE) today expressed
Tuesday, July 18, 2000
Fortune to Create Exchange-Traded Funds
The latest in a procession of exchange-traded funds (ETFs) to enter the market comes from Fortune, which has licensed State Street Global Advisors (SsgA) to manage new ETFs based on the Fortune 500 and Fortune e-50 stock indexes.
Monday, July 17, 2000
Five Lies About Fund Manager Talent
Five Lies About Fund Manager Talent
Wednesday, July 12, 2000
Calvert Group Opens a Socially Responsible Fund of its Own
Socially responsible index pioneer Calvert Group recently launched the Calvert Social Index Fund (ticker symbol: CALVIN) to track the performance of the Calvert Social Index. The Calvert index aims to be the broadest-based, most rigorously screened benchma
Tuesday, July 11, 2000
Investors Flunk Vanguard Test
Mutual fund investors scored an average of 37% on a test of their fund and market savvy. The quiz, sponsored by the Vanguard Group and Money Magazine, tested investor knowledge of mutual funds basics and market fundamentals.
Sunday, July 09, 2000
Interview with J. Doyne Farmer Chaos Theorist Discusses the Markets and Nonlinear Theory
Indexers use the efficient market hypothesis to help explain generally why stock market averages are so hard to beat with consistency. But efficient market theory does a poor job of explaining bouts of speculation or panic - irrational investors.
Thursday, July 06, 2000
Are the Risks of Exchange-Traded Funds
A key risk inherent in exchange-traded funds (ETFs) is being misrepresented by its proponents, charges Mercer Bullard and the Consumer Federation of America. Sponsors of ETFs responded variously-challenging the critics' data, agreeing, or vowing to change
Thursday, July 06, 2000
Are the Risks of Exchange-Traded Funds Being Downplayed?
A key risk inherent in exchange-traded funds (ETFs) is being misrepresented by its proponents, charges Mercer Bullard and the Consumer Federation of America. Sponsors of ETFs responded variously-challenging the critics' data, agreeing, or vowing to change
Wednesday, July 05, 2000
Indexing on a Shoestring
The biggest excuse small investors make is always lack of cash. But sit back and imagine enjoying the diversification benefits and low cost of indexing for just $50 each month.
Friday, June 30, 2000
The New Indexing
Old-school indexers claim the market portfolio is the only legitimate stock investment. Tilting a portfolio toward a particular piece of the market like small company stocks or value stocks is seen as stock picking, which in turn is seen as gambling (Jonat
Friday, June 30, 2000
Risk Cost of Capital
Expert from Interview with Eugene Fama
Thursday, June 29, 2000
Bond Index Funds - A Synopsis
It is fitting that a detailed discussion about bond index funds should begin by mentioning John Bogle and Vanguard Mutual funds.
Wednesday, June 28, 2000
SEC Considers Changing Rules on Mutual Fund Disclosure
The Securities and Exchange Commission (SEC) is proposing to force mutual funds to disclose both pre-tax and after-tax returns.
Tuesday, June 27, 2000
Buying Technology Stocks With Exchange Traded Funds
These days you can turn on the television, almost 24 hours a day, and see which market savant is buying tech stocks, who has changed their mind and is selling out of tech stocks, who is jumping into biotech stocks, and so forth.
Sunday, June 25, 2000
Modern Finance Founder Merton Miller Dies
Economist Merton Miller, one of the founders of modern corporate finance and a Nobel Prize recipient, passed away on June 3 in Chicago. He was 77 years old.
Wednesday, June 21, 2000
Does an Investor Who is Younger than 40 Need Bonds?
We've been seeing some interesting portfolio mixes lately. One young gentleman raved about his "diversified" portfolio and how well he was doing. He had 50% in an S&P index fund, 20% in the tech laden Janus Growth & Income, and 30% in his employers' (also
Tuesday, June 20, 2000
It Pays to be Good
Socially responsible mutual funds were first introduced in the early 1980s, but until recently their performance has lagged the market. The "sin stocks"- those involved in tobacco, weapons development, nuclear power, and pornography-outperformed socially r
Monday, June 19, 2000
Japanese Government Shifts Emphasis to Topix
The Nikkei 225 Average has long reigned as the dominant Japanese index, but the Tokyo Stock Exchange's Topix index is quickly strengthening its reputation in status-conscious Japan.
Thursday, June 15, 2000
From the Message Boards: Index Funds Disciples Duke it Out
Following is a recent letter exchange Jim Wiandt (the Managing Editor at IndexFunds.com, pictured above left) had with Jason Zweig (The Fundamentalist at Money.com, pictured above right). It was posted to the Index Funds Seminar discussion board with Zweig
Tuesday, June 13, 2000
Parade of iShares Continues
Barclays Global Investors continues its rollout of iShares. By mid-July, there will be over 50 domestic and international iShare funds available covering just about every broad U.S. market sector, and most of the major international markets.
Monday, June 12, 2000
Bogle Wins $25 Bet
Five years after making the biggest bet of his life, John C. Bogle, founder of the Vanguard Group, collected $25 from Robert Markman of Markman Capital Management.
Thursday, June 08, 2000
Standard & Poor's Sues Vanguard
Two indexing heavyweights are sparring over the use of indexes by exchange-traded funds. Standard & Poor's parent company McGraw-Hill sued Vanguard Group June 8th over the use of its flagship S&P 500 Index.
Tuesday, June 06, 2000
Recent Portfolio Theory - Advice in a Multifactor World
A bewildering array of new portfolio theories confront the investor as he tries to put together an investment strategy. Cochrane's paper touches on some of the more important studies, and ultimately comes to a number of conclusions that should come as no s
Wednesday, May 24, 2000
No More Free Money - X.com Ends Rebate Program
Just six months after launching the fund that paid you to invest, x.com announced it was ending the program.
Tuesday, May 23, 2000
Bush's Plan: Indexing Boon or Market Disaster?
Republican presidential candidate George W. Bush recently proposed a plan to partially privatize Social Security. Would the plan give a healthy boost to the stock market while shoring up retirement returns, or would it inflate the market into a dangerous b
Tuesday, May 23, 2000
The Nature of Investment Risk
The Nature of Investment Risk
Thursday, May 18, 2000
Barclay's ETFs in Play - Cheap to Hold, Easy to Trade
In a further boon to index investors, Barclays has launched a series of funds known as iShares that have record-breaking low expense ratios. During the month of May, Barclays will commence trading of 14 new funds. Four, tracing the S&P 500, the Russell 10
Monday, May 15, 2000
Vanguard Enters ETF Fray, Bogle Not Sure He Would Have Done It
The Vanguard Group announced its plan to launch Exchange Traded Funds (ETFs). The funds, called Vipers, would be linked to Vanguard index funds. In a Wall Street Journal interview, Vanguard founder John Bogle said, "Anything that gets investors involved wi
Monday, May 15, 2000
Merrill Lynch broker lost $36.3 MILLION for Clients
On May 16, 2000, Hechinger and Gasparino at the Wall Street Journal reported that Merrill Lynch & Co had been embarrassed by two of the company’s own brokers, in separate incidents, resulting in a $750,000 total fine. Merrill Lynch also agreed to pay the
Thursday, May 11, 2000
First ETFs Launched in Europe
Riding a wave of popularity in the United States, the first exchange-traded funds (ETFs) to be based in European markets were launched. The new ETFs track indexes in Germany and the United Kingdom.
Wednesday, May 03, 2000
Soros Retreat!
Billionaire George Soros, long an icon to active hedge fund managers, announced his withdrawal from aggressive hedge fund investing.
Thursday, April 20, 2000
Are Small Cap Index Funds Poised for a Rebound?
Small cap stocks have outperformed large cap companies this century over many longer-term periods. In recent years, however, the returns of large cap indexes have dwarfed those of small cap indexes. Does this signify the forthcoming dominance of small cap
Tuesday, April 18, 2000
Comparing Different Tax Sheltered Investment Accounts
Investors have a variety of options when looking to invest their money in tax-sheltered retirement accounts. For investors with more limited income, the traditional IRA allows for an immediate tax deductions. The more recently instituted Roth IRA is availa
Tuesday, April 18, 2000
Index Returns Through 3-31-2000
Returns are in percentages, all annualized except for 1st Quarter 2000. Example: an investor placing $100 in 3-month T-Bills in 3/31/99 would have approximately $105.20 before fees in 3/31/00.
Tuesday, April 18, 2000
Tax Sheltering Index Funds
While it may seem counterintuitive, your retirement fund may well be the best place to hold the riskier end of your portfolio.
Thursday, April 06, 2000
Nasdaq's Wild Ride: Volatility's OK, Say Fund Managers
Investors should not be surprised by the Nasdaq's wild gyrations, say index fund managers. Nor should they be overly concerned.
Wednesday, April 05, 2000
Magellan Finally Dethroned
The eclipse was predicted for years. Finally on April 5 Vanguard 500 became the largest fund in the world with $107.2 billion in assets, surpassing Fidelity's Magellan Fund at $106.9 billion, according to fidelityinvestor.com.
Monday, March 27, 2000
Closet Index Funds, Investors Don't Ask, Funds Don't Tell
Fans of actively managed mutual funds pay handsomely to try to outperform the S&P 500. But many do not realize that some of their favorite funds resemble the S&P 500 or other index so closely that beating this benchmark by much is unlikely. When fees are f
Friday, March 24, 2000
The Merchants of Greenwich
Aside from my Simpsons addiction I don't watch much television. But when a friend called me up one evening and told me to catch the PBS/Nova documentary "The Trillion Dollar Bet" I knew I wasn't going to be disappointed. After all, it's not every day that
Thursday, March 16, 2000
Tracking the Nasdaq
The Nasdaq index is capturing everyone's interest, but there are precious few ways to invest in it. The performance of the Nasdaq has gone through the roof in the past few years. Created in 1971, it didn't reach 1000 until July 7, 1995; it took less than f
Thursday, March 09, 2000
Ebank X.com Pays Customers to Invest
One of the best deals in indexing for the small investor could well be x.com's offer to pay investors to place their money in a reputable S&P fund.
Sunday, March 05, 2000
Is Merrill Lynch Tipping its Hand with HOLDRS?
Mainstream broker Merrill Lynch has introduced HOLDRS, a growing line of exchange traded index funds. They may not be for mainstream portfolios.
Tuesday, February 29, 2000
Wash Sale Rules
A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you...
Wednesday, February 23, 2000
Exchange Traded Funds: A White Paper
This paper reviews the history of exchange traded funds (ETFs). ETFs, with names such as Spiders and Diamonds, are investments that are both exchange-listed (like corporate equity securities) and open-ended (continuously offering shares like open-ended mut
Thursday, February 17, 2000
Price War
State Street Global Advisors plans to drop fees on its S&P index fund below those of Vanguard, according to a recent SEC filing.
Monday, February 14, 2000
Dow 36,000!
The market can be thought of as a giant tug-of-war between two teams, one of which thinks that the market is too high, the other too low. Straining at the very far right end of the rope are two fellows named James Glassman and Kevin Hassett (GH).
Monday, January 31, 2000
Performance of UK Equity Unit Trusts
Studies of money manager performance are the bottom line test of market efficiency. They do not claim to uncover specific types of market failure as do the 'anomalies' literature of the 1980s and the behavioural finance literature of today.
Tuesday, November 30, 1999
Professor Fama Answers the Critics
The earliest Fama-French research into the sources of stock returns generated controversy among academics. Many disputed the research and published their own findings.
Monday, September 13, 1999
Hulbert Attacks Efficient Market Theory
The New York Times lends great authority to everything it publishes. It is generally thorough and conscientious. That is why it is shameful to see the dignified institution let a paid stock picking professional use it as cover for misleading, simplistic, s
Tuesday, August 31, 1999
Putting Theory Into Practice
When David Booth, '71, and Rex Sinquefield, '72, left successful, established careers to form their own company with an untried idea, people thought they were crazy. Not just because they were walking away from good jobs with established firms, but because
Thursday, July 29, 1999
The Inevitable: An Index Fund for the Internet Sector
Investec Guinness Flight Global Asset Management launched the much awaited no-load Guinness Flight internet.com(TM) Index Fund today, July 30th, 1999. It will be the first index fund tracking the Internet sector. Investors seeking to overweight this indust
Friday, July 09, 1999
Fidelity's New "Fund of Funds"
On July 6, 1999, Fidelity Investments announced a new Four-in-One Index Fund touting it as the "fund of funds". It is a no-load well-diversified balanced fund that invests in both domestic and international equities, and U.S. bonds. The fund's low expense
Wednesday, July 07, 1999
Leader of the Pack: The DFA Funds
the firm takes a more academic approach to determining the benchmarks for its funds, most of which are small-cap- or value-oriented.
Wednesday, June 30, 1999
Random Drift and Asset Allocation
A doubling of the price-earnings ratio occurs when r-g is cut in half. If r-g is 6%, then the P/E ratio for a stock or index is 16.7. If r-g is 3%, then the P/E ratio is 33.3.
Wednesday, June 23, 1999
Are TIPS Tops Among Bond Funds?
In her June 21, 1999 Wall Street Journal article, "Discovering Inflation-Indexed Bond Funds," Karen Damato takes a look at bond funds specializing in a recent innovation of the U.S. Treasury - inflation-indexed bonds, more commonly known as TIPS (Treasury
Monday, June 14, 1999
"Funds vs. Indexes: Data are Misleading"
Mr. Clements examines the reasons why actively-managed diversified U.S. stock funds have been trailing the Standard & Poor's 500 Stock Index's gain while international funds have been able to beat Morgan Stanley's Europe, Australasia, and Far East (EAFE) I
Sunday, June 13, 1999
"Monkey Business"
"At first glance, the professional money managers seem to be providing real value to their followers. On closer examination, it seems that buying their favorites is no better than throwing darts," writes Woolley. If the pros can't beat the market, then ind
Monday, May 31, 1999
Interview with Eugene Fama
Eugene F. Fama is on the Board of Directors of Dimensional Fund Advisors. He is a member of their investment committee and serves as an investment strategist. Professor Fama received his Ph.D. from the University of Chicago in 1964 and he also holds an MBA
Thursday, May 06, 1999
The Equity Premium and Stock Market Valuations Conference: Day 1
Top investment economists gathered in early May at UCLA's Anderson School of Business to exchange ideas and data on the latest in investment theory. Many papers were densely packed with advanced statistics, but presenters tackled questions of fundamental i
Friday, April 30, 1999
100 Ways to Beat the Market
Since I'm always looking for ways to beat the market (not that I always succeed, mind you), this new gem caught my eye. Two other books by this author have helped me in the past, so I'm naturally interested in any new ones.
Monday, April 26, 1999
Are Day Traders Trading One Evil for Another?
Are individual investors really making a change when they transfer funds from Fidelity Magellan to an online discount broker?
Wednesday, April 21, 1999
John Bogle on Indexing and the State of the Market
Jack Bogle, Chairman of The Vanguard Group and the father of index investing, doesn't like to predict market trends, but he is flatly warning investors not to depend on outsized returns from big stocks. He has little financial incentive to make such a stat
Sunday, March 21, 1999
Where Have All The Geniuses Gone?
THE BRILLIANT MUTUAL FUND MANAGERS OF YORE ARE NEARLY EXTINCT. THE LESS BRILLIANT ARE IN DANGER OF LOSING THEIR JOBS. BECAUSE IN TODAY`S HOT MARKET, INDEX FUNDS ARE GOLDEN.
Friday, March 19, 1999
Even Enhanced Index Funds Trail the Market
Enhanced index funds should be in the best position to at least modestly outperform index funds. All a fund manager has to do is stick to the majority of stocks in an index and then overweight a small number to try to eke out enhanced returns. And in princ
Monday, March 15, 1999
Schwab Backs Indexing
The largest US discount brokerage firm released a study that emphasizes indexing as the core of an optimal long-term equity portfolio. The study by the Schwab Center Investment Research at Charles Schwab & Co. disputes the benefits of an all-actively manag
Sunday, March 14, 1999
Smart Timing
PHILADELPHIA, PENN. - Market timing is viewed almost as skeptically as stock picking by many indexers. But officials at new money manager Aexpert Advisory, Inc. insist they have a unique timing strategy. It involves artificial intelligence techniques to sw
Sunday, March 14, 1999
"Mining Fool's Gold"
The authors' paper urges investors to view all "foolproof" investment strategies and trading rules with some degree of skepticism. They remind readers of the pitfalls of data mining and how to avoid them. Their analysis subscribes to The Random Walk Theory
Sunday, February 28, 1999
Consumer Reports Endorses Indexing, Confusedly
Consumer Reports, the non-profit consumer advocate magazine, recommends an investment philosophy that is remarkably similar to indexing in its lead article "Mutual Funds: Which way is Up?" of its March issue.
Sunday, February 28, 1999
Vanguard Lowers but Still Defends Entry Fees
VALLEY FORGE, PENN. - Index fund giant Vanguard Group lowered entry fees for a mid-cap and two small-cap funds. The Vanguard Mid-Cap Index Fund removed its .25% entry fee entirely, while the Small-Cap Growth and the Small-Cap Value Funds halved their entry
Sunday, February 21, 1999
Business Week Lauds Indexing
Business Week's courageous February 22 articles on index indexing, are obligatory reading for any retail investor. Tapping a strong array of data surrounding indexing, Business Week writes convincingly and elegantly about the key issues in indexing.
Sunday, February 14, 1999
Islamic Index Tracks "Value" through Morality
BAHRAIN — As with any form of investment, indexing is affected by cultural and religious values. A new example is than Dow Jones' new Islamic Market Index, which helps Islamic investors and banks participate in equities.
Thursday, December 31, 1998
Small Cap Growth Indexing and the Multifactor Threestep
Unless you've just spent the last decade looking for Elvis, you know that indexing most asset classes will beat most active managers. From time to time a majority of active managers in a given asset class will beat indexing, but this usually doesn't last v
Thursday, December 31, 1998
The Grand Infatuation
Troll the latest reincarnation of the office water-cooler-investor internet chat rooms and discussion boards-and you'll find abundant evidence of romantic disaster in the making. No, I'm not suggesting that these forums are hotbeds of amorous intrigue, but
Thursday, December 31, 1998
The Slippery Slope of Fund Expenses
Investors not infrequently founder on the shoals of incorrect assumptions. Among the most prominent are the existence of money manager skill and a simple faith that past asset class returns are precisely predictive of future returns.
Thursday, December 31, 1998
Foreword
The simple case for index funds is part theory, part practice, and part arithmetic. Theory says that since (a) gross returns earned by investors as a group must equal the gross returns earned by the total stock market, (b) net returns - after advisory fees
Thursday, December 31, 1998
Testimonials To Indexing From Leading Investment Experts
John C. Bogle is one of the most respected leaders in the mutual fund industry and is Chairman of the Vanguard Group of Investment Companies, the second largest mutual fund family in the world.
Thursday, December 31, 1998
Will Active Mutual Funds Continue To Underperform The Market In The Future?
Attempts to predict the future are not very profitable expenditures of time or money. But there are a number of reasons why it can be expected that a large majority of actively-managed mutual funds will continue to underperform the market in the future.
Thursday, December 31, 1998
An Interview with Professor P. Raghavendra Rau, Assistant Professor of Finance at Purdue University
The clever and clear study "A Rose.com by Any Other Name" suggests there may be inefficiencies, especially in markets of great fluctuation. It does not suggest that these inefficiencies are easy to spot.
Thursday, December 31, 1998
Common Sense on Mutual Funds
Even the smallest library of every serious index investor should contain Common Sense on Mutual Funds, the latest book by John Bogle of The Vanguard Group.
Thursday, December 31, 1998
Exclusive Interview: Prof. William Sharpe
PALO ALTO, CALIF. - Few individuals have advanced theoretical underpinnings of index investing more than Professor William Sharpe, STANCO 25 Professor of Finance at Stanford University and Nobel Laureate in economics. Few individuals are doing more to make
Thursday, December 31, 1998
Rydex on a Wild Ride in '98
Rydex is proof that smaller index fund groups can still thrive. Securities Data Publishing rated it the fastest growing fund family in 1998, during which time it grew from $1.7 Billion to $4.1 Billion under management. It achieved this by bringing out crea
Thursday, December 31, 1998
SPDRs and Diamonds
Mutual funds are not the only way to invest in domestic indexes. Increasingly popular are so-called SPDRs or Standard & Poor's Depository Receipts, which track indexes just like a fund but trade like a stock on the American Stock Exchange.
Thursday, December 31, 1998
Exchange-Traded Indexed Securities
Exchange-traded funds (ETFs) are increasing in popularity, as they are often responsible for approximately 50% of the daily trade volume on the American Stock Exchange (AMEX).
Thursday, December 31, 1998
Index Mutual Funds: How to Simplify Your Life and Beat the Pro's
I am very busy and don't have time to pour over investment books all day. But, as a beginning indexer, I have a lot to learn. That's where this book came in handy. I was able to read it in a few days in the few minutes I have to sit down and read.
Thursday, December 31, 1998
Mutual Funds For Dummies
I wouldn't call myself a dummy. But, between me and my husband, I was the ignorant one when it came to mutual funds. He handles our investments, and he always keeps me informed, but I never really cared to know more than I had to.
Thursday, December 31, 1998
Dow 36,000 – Fact or Fiction?
In a sequence of op-eds in the Wall Street Journal, an article in the Atlantic Monthly, and a book, James Glassman and Kevin Hassett of the American Enterprise Institute argue that the stock market is undervalued, possibly by a factor of three or more. The
Thursday, December 31, 1998
The Coffeehouse Investor
Do you ever wonder if financial journalists have real lives? No, really. Each month, Money Magazine, Kiplinger's and all the rest boldly announce the mutual funds you should buy now.
Thursday, December 31, 1998
Bonds Index Funds Just As Compelling
Growing fears of an overvalued stock market have brought bonds back into the limelight. But investors' dilemma still remains which bond fund to invest in. Bond index funds, with their relatively low fees (around 0.2% compared to over 1% charged by active m
Thursday, December 31, 1998
Does the "Index Effect" boost Index Performance?
As indexing gains wider acceptance among the investment community, it might affect security prices in the future. This effect is likely to be most acute for large-cap stocks (S&P 500 Index funds) that have attracted most of the index investments in the rec
Thursday, December 31, 1998
Hedge Fund Strategy Indices
Hedge Fund Research, a full service financial consulting firm specializing in alternative investments, recently launched indices for a number of hedge fund strategies (available on Bloomberg, Bridge and at www.hfr.com). The indices capture the core, non-le
Thursday, December 31, 1998
How Indexes are created:
Not all indexes are created in the same way. How they are put together can affect investor returns. Three methods primarily used to construct indexes are:
Thursday, December 31, 1998
Indexing the Multinationals
Dow Jones & Co. Inc. recently launched the Global Titans Index, a 50-stock capitalization-weighted index comprising the world's largest multinational companies. The index represents a well-diversified global portfolio that has delivered marginally better r
Thursday, December 31, 1998
International Active Managers Crush the EAFE, or The Japan Effect
In principle, international indexing should beat active international funds even more than domestic indices beat active domestic funds. That is because international expense ratios and transaction costs are even higher as a percentage of assets.
Thursday, December 31, 1998
Malaysian WEBS A Lesson in Risk, and Some Recent Developments
WEBS are not immune to political and economic turmoil. Many investors were surprised when in September of 1998 Malaysia's central bank introduced exchange controls to prevent capital from leaving the country and stabilize the exchange rate of the Malaysian
Thursday, December 31, 1998
Small Caps Undervalued?
Small-cap indexing works best when small stock returns exceed those of large stocks. Should there be a resurgence of the small-caps, investors would be better off investing in small-cap index funds rather than an actively managed portfolio of small stocks.
Thursday, December 31, 1998
"The Inefficient Markets Argument for Passive Investing" by Dr. Steven Thorley
Conventional wisdom justifies an indexing strategy based on the assumption that markets are efficient. The large-cap sector, considered informationally efficient, has accounted for an astounding majority of the indexed investments.
Thursday, December 31, 1998
Barclays Global Investors recently filed with the SEC to offer 51 open-end domestic index funds
A 1998 report commissioned by Barclays Global Investors and conducted by PricewaterhouseCoopers reaffirms the growing knowledge that passive management leads to higher returns than active management. It concludes that indexing has saved institutional inves
Thursday, December 31, 1998
Want to Day Trade the Indexes?
With the huge success of WEBS, Barclays Global Investors recently filed with the SEC to offer 51 open-end domestic index funds. They are revolutionary new products for index investors allowing them to day trade almost all U.S. indexes.
Thursday, December 31, 1998
WEBS - A Flexible Way to Span the Globe
Index investors have had limited options in foreign investing, but in the past two years WEBS (World Equity Benchmark Shares) have changed this situation dramatically. WEBS are country-specific indexes (17 so far) that trade like stocks.
Thursday, December 31, 1998
Index Mutual Funds: Profiting from an Investment Revolution
Are you an indexer? According to the new book Index Mutual Funds: Profiting from an Investment Revolution, it takes more than just owning an index fund to qualify. Indexers have a good understanding of the many advantages that index funds offer. This kn
Thursday, December 31, 1998
Index Your Way to Investment Success
Among indexing books, Index your Way to Investment Success has the most comprehensive description of how to build an investment plan. It presents a simple investment strategy and then describes ways to enhance the strategy in hopes of higher return.
Thursday, December 31, 1998
IndexFunds.com Selected Top Web Site
Forbes magazine, in their first "Interactive Money Guide," has chosen IndexFunds.com as one the top 250 Web Sites on the Internet. The Fall 1999 issue covers sites on investing, banking, home buying, cars, collectibles, travel, sports, and more.
Thursday, December 31, 1998
Indexing Basics: Your Questions Answered
What is indexing? Why index? What is an index fund? How do index funds differ from other mutual funds? How does indexing work? Why don't index investors try to beat the market? What is an Exchange-Traded Fund (ETF)? What can an index fund track?
Thursday, December 31, 1998
Model Portfolios - Summary of all Models
Model Portfolios - Summary of all Models
Thursday, December 31, 1998
Returns Data: 1973-1998
The following table shows the returns for major asset classes since 1973. Investors can use this data is to determine the relative risk and return characteristics of the asset classes.
Thursday, December 31, 1998
Returns for CRSP Market Cap Deciles for Various Time Periods
The following charts show the total returns for the CRSP (Center for Research in Security Prices, University of Chicago) market cap deciles and the S&P 500 Index. The CRSP deciles are created by taking all of the NYSE stocks (excluding ADR's REIT's, foreig
Thursday, December 31, 1998
Style Drift Illustrated
Actively-managed funds often start out as one kind of animal and slowly evolve into something totally different over time. For investors who care about developing asset class portfolios with funds that stay true to their style, this "style drift" is an unw
Thursday, December 31, 1998
The "Size" Effect Over Different Time Periods
It is widely accepted (although there is ongoing debate) that small company stocks outperform large company stocks over time due to their higher risks.
Thursday, December 31, 1998
New York Institute of Finance Guide to Mutual Funds 2000
Mutual Funds are undoubtedly one of the great financial inventions of all time. Fund investors can get broad diversification and professional management at much lower cost and greater convenience than would be possible otherwise. However, with more than 12
Thursday, December 31, 1998
Should You Invest In "Growth", "Value", or Both?
There is a big debate going on in the academic community about where the return premium on value stocks comes from. Note that the debate is not whether their is a premium, but rather its cause.
Thursday, December 31, 1998
The Only Guide to a Winning Investment Strategy You'll Ever Need
There are many books touting themselves as "The Only Book You Will Ever Need!" Unlike many of the others, though, this one actually comes close to living up to the claim.
Thursday, December 31, 1998
Winning With Index Mutual Funds
You get what you pay for, right? Well, according to the recent book Winning with Index Mutual Funds, on Wall Street nothing could be further from the truth. Most investors end up paying too much in fees for too little in performance. The answer for most
Thursday, December 31, 1998
Beware the Claims of the Stock Picking Gurus
It's easy to dismiss the outrageousness of the claims made by someone like Wade Cook. Even if you don't know that Cook has been in trouble with securities regulators and courts for many years now, your common sense tells you that five and six digit returns
Wednesday, August 05, 1998
Twenty-Five Years of Indexing
A report commissioned by Barclays Global Investors concludes that indexing has saved institutional investors worldwide as much as $105 billion since its inception 25 years ago. The report, entitled "Twenty-Five Years of Indexing," was conducted by Pricewat
Sunday, July 05, 1998
How the Really Smart Money Invests
Suppose you made a list of the smartest people alive in finance. What would you give to know how these titans invest their own money?
Thursday, April 30, 1998
Engineering Portfolios for Better Returns
This isn't surprising. An active manager's primary directive, hardwired into his psyche, is to pick winners. Value investing is about investing in earnings-distressed companies. Picking the big potential earners from the value stock universe is similar to
Tuesday, March 17, 1998
Barclays Global Investors predicts 70%-80% levels of passive management in pension funds
Barclays Global Investors, with �295 billion assets under management, the world` s largest quantitative fund manager, has predicted that levels of 70%-80% passive management would be supportable.
Monday, December 08, 1997
Vanguard's Sauter Comments on Major Index Fund Events
Did large capitalization stocks such as those in the S&P 500 Index earn their high returns in recent years by earnings growth? Are index investors tilting the market?
Friday, January 31, 1997
An Interview with Eugene Fama
Eugene Fama grew up in Boston, a third generation Italian-American. While an undergraduate at Tufts University, he excelled in athletics and majored in French-an inauspicious beginning for a future giant in the field of economics.
Friday, January 31, 1997
An Interview with Merton Miller
Merton Miller's illustrious academic career started at Harvard, from which he graduated in 1943. He spent the next few years in Washington, D.C., working at the US Treasury and the Federal Reserve. He earned his Ph.D. from Johns Hopkins in 1952.
Friday, January 31, 1997
An Interview with Rex Sinquefield
An Interview with Rex Sinquefield
Tuesday, September 17, 1996
Statement on Risk Disclosure by Mutual Funds
Financial Economists Roundtable - The Need for Information about Mutual Fund Risks
Sunday, December 31, 1995
Can you get past the bouncer?
DFA sells a very useful mix of targeted index funds. Unfortunately, it`s a hassle to buy them. Can you get past the bouncer?
Wednesday, October 11, 1995
Active vs. Passive Management
With respect to market behavior there are, at the extremes, two views. At one extreme is the well-known efficient market hypothesis which says that the prices are always fair and quickly reflective of information. In such a world neither professional inves
Saturday, September 30, 1995
Active vs. Passive Management
With respect to market behavior there are, at the extremes, two views. At one extreme is the well-known efficient market hypothesis which says that the prices are always fair and quickly reflective of information. In such a world neither professional inves
Tuesday, February 28, 1995
A Work of Art: CRSP's Database
In 1959, Louis Engel, a vice president at the firm then known as Merrill Lynch, Pierce, Fenner & Smith, telephoned James H. Lorie, '47 Ph.D., (then professor of business administration, now professor emeritus since 1991) and asked whether anyone knew how w
Tuesday, February 28, 1995
Coming Full Circle
For Sinquefield, CRSP was a major factor in the decision to come to the GSB. "Basically, financial economics would still be in its nascent stages if it weren't for a database like CRSP," he says. "Academics simply wouldn't have been able to do the research
Saturday, December 19, 1992
Darts and the Dow
How good are the experts? Not very, according to a short-term experiment for the report.
Thursday, November 26, 1992
Burton Malkiel John Stossel - Picking Stocks with Darts
For people who have never dabbled in it, the stock market can be very intimidating. So many companies to choose from, so much money to be made or lost. So if you want to try your luck, what is the soundest way to choose stocks? Many people, of course, turn