September 4, 2016 |
Can we have too much of a good thing? Index funds are guided not by the wizardly stock-pickers of old but by number crunchers who buy lists of representative securities and hold them, rise or fall. They have cut costs and boosted profits for large and small investors. But U.S. and European professors scrutinizing the impact of the Big Three index-fund purveyors - BlackRock Inc., Vanguard Group, and State Street Corp. - say they see, in the triumph of indexing, not just a cheap way for investors to squeeze profits but also threats to capitalism as we know it. Index funds and managers of index "strategies" now control 34 percent of global stocks by value, up from 25 percent just five years ago, writes Inigo Fraser-Jenkins, in a report last month for Sanford C. Bernstein, New York.
May 28, 2016 |
When investors think of Vanguard, they think of index funds. But the $3 trillion mutual fund giant oversees more than just low-cost passively managed benchmark funds linked to the S&P 500 and other indexes. New Vanguard fund launches in the U.K. on Wednesday highlight how the low-cost king of mutual fund investing is expanding its footprint overseas - continuing to extend its low-fee brand to active management as well, in what may be a test-run at product launches back home. Currently, out of its total $3.2 trillion in assets, $2.2 trillion that Vanguard manages for investors is in index funds.
April 13, 2015 |
"I suppose you're the enemy," John C. Bogle, founder of Malvern-based Vanguard Group and that rare creature, an investment celebrity, told the crowd of bargain-hunting stock-pickers in an ornate ballroom in New York's Plaza Hotel. Bogle was onstage for a "Great Debate" vs. his host, Jim Grant, Federal Reserve-bashing, gold-loving publisher of Grant's Interest Rate Observer , a contrarian investors' bible. The two squared off over Bogle's once-radical, now-mainstream proposition that even professional securities pickers can't beat market indexes like Standard & Poor's list of the 500 major U.S. stocks.
March 23, 2015 |
Gov. Wolf is trying to push Wall Street out of Harrisburg. He wants the two big employee retirement systems, SERS (for state workers) and PSERS (for public school staff), to reverse their long reliance on high-fee managers. These firms collected more than $600 million in fees from the plans last year - plus a share of liquidation profits from the state's private-equity investments, which Pennsylvania doesn't count. Despite all the creative investing, years of underfunding have left SERS and PSERS with multibillion- dollar gaps between the assets they own and the checks they will owe. The shortfall has been addressed in recent years by increasing taxpayer "contributions," which Wolf wants to stabilize.
September 16, 2014 |
If you are unhappy with fees charged by active money managers, stop paying them. Low-cost index funds track the stock market, say Mitch Tuchman and Charley Ellis at ReBalance IRA. "There hasn't been a five-year period in over six decades when a 50-50 stock-and-bond portfolio has not shown a positive return," said Tuchman, of Palo Alto, Calif. "If you own markets through indexing, your portfolio always recovers in a correction. There is a way to really win at this game - by playing not to lose.
June 2, 2013 |
The mutual fund industry is forever trying to build a better mousetrap - with mixed results. Index funds were once a novelty, but pioneers such as Vanguard 500 brought about a new standard for low costs, tax efficiency, and solid performance. Target-date funds, too, were once the next big thing, but losses as high as 45 percent during the 2008 crash gave the category a black eye. The latest contender to be a better mousetrap is known as the risk-parity fund. Just four years after its debut, the new breed of funds has already attracted nearly $30 billion in assets - $16 billion of that in the last year, according to Lipper.
March 11, 2013
Josh Shapiro is the Montgomery County commissioners chairman and serves as chairman of the county's pension board When trying to pare budgets and be more efficient, go where the money is. That's why Montgomery County, the commonwealth's third most populous county, closely examined the costs associated with our $450 million public employee pension fund. Public pensions are an area of significant potential savings, and of particular importance to state and local governments around the country.
February 10, 2013 |
Are there guns in your investment portfolio? Gun control is the kind of issue that can wake you up to the fact that the money in your fund portfolio or 401(k) affects more than just your retirement security. The financial markets support all kinds of companies, including some you might not believe contribute to the greater good. Removing investments from a portfolio on moral grounds isn't always a simple matter. There are potential costs to putting principles before profits. Over the last 10 years, Smith & Wesson has posted an average annualized return of 17 percent, compared with the 8 percent return of the broader market.
October 9, 2012
DEAR HARRY : My father showed me an article about John Bogle (he's the guy who founded Vanguard Funds) in which Bogle once again promoted index funds. I have been an investor in no-load funds ever since I heard your favorable opinion at least 10 years ago. But I have never really understood why going for the "average" of a group (as you do in index funds) is better than going for a policy of beating the average. Don't we all hope that we can do better than the market average? Should I go for Bogle's advice, or should I look for the funds or individual stocks that have a good history and good prospects?
October 7, 2012 |
BOSTON - Index mutual fund investors are a cost-conscious bunch. Rather than seek out managers with a good shot at beating the market, they parse tiny differences in fund expenses. Index funds are cheaper because no one is being paid to pick stocks. Every cent that doesn't end up in someone else's pocket counts, the thinking goes. If that's your mindset, you'll want to pay attention to an aspect of index fund expenses that's drawing greater scrutiny: fees that fund companies pay to license benchmark indexes.