What do Ginnie Mae (GNMA) bonds yield? The table below lists the yields on two of the major Ginnie Mae (GNMA) indices as well as the latest SEC yield on some of the top Ginnie Mae (GNMA) dedicated funds. A note of caution when you are looking at yields on Ginnie Mae funds. Like all SEC yields, these yields are based on the last 30-days of income generated by the fund. They are not directly comparable to the yields on the Merrill Lynch and Barclay’s Ginnie Mae (GNMA) indices. Description Symbol Yield as of 7/31/2020 Yield as of 8/31/2020 Merrill Lynch Ginnie Mae … [Read more...]
SEC Cracks the Floodgates to New Hedge Fund Investors
You may already be an "accredited investor," with more than $1 million in net assets (excluding your home) or $200,000 in annual income. If so, you've long had the ability to invest in hedge funds, where you get the privilege of paying the managers 20% of your profits and 2% of your assets. But now, the SEC is allowing many more Americans to play at the hedge fund casino. Paul Kiernan reports in The Wall Street Journal: The Securities and Exchange Commission deemed more investors capable of navigating the opaque world of leveraged buyouts, hedge funds and startups, a decision likely to … [Read more...]
Investors Facing Long-Awaited ETF Industry Shakeout
You have probably invested at some point in ETFs or ETNs. The exchange-traded investments have thrived for decades now as a lower-cost and more efficient alternative to mutual funds. But after years of huge fund companies issuing new ETFs and ETNs by just throwing products at the wall to see what stuck, the industry is shaking out. The Wall Street Journal reports that this year alone 188 exchange-traded products have been shut down. Michael Wursthorn writes: Asset managers have closed more exchange-traded products than they have launched this year, a sign of how market gyrations have … [Read more...]
Vanguard is Moving into Private Equity
Vanguard announced it is launching a private-equity fund. Initially, the fund will only be offered to endowments and foundations, but Vanguard plans to open its private equity fund up to wealthy individuals in the future. Is Vanguard’s move a sign of froth in the private equity space, or trouble with the hurdles required to come public? Probably both, but the number of IPOs in the U.S. has plummeted since the dotcom bust and it still hasn’t recovered. The cost and hassle of being a publicly-traded company has made staying private or going private more attractive. Dawn Lim reports at The … [Read more...]
Private Equity Investors Pay More for the Same Return and Lower Liquidity. Why?
At The FT, Jonathan Ford reports that after 2006, private equity returns have been about the same as those from tradeable stocks. Yet, despite higher fees and lower liquidity, investors are still clamoring for private equity investments. He writes: Academics have long questioned whether the internal rate of return (IRR) calculations favoured by buyout firms overstate their performance against quoted stocks. Consequently, most recent studies favour the so-called “Public Market Equivalent” measure, which takes all the cash flows between the investors and a buyout fund, net of fees, and … [Read more...]
You Want to Hire Who as Your Financial Advisor?
The Financial Times reports that Vanguard’s assets under management have surged past $6 trillion for the first time. In the investment business, the biggest rarely means the best. Big funds and big investment managers have fewer opportunities to choose from, and bigger funds are harder to maneuver. Do You Think Your Business Really Matters to Vanguard? Even if you have a $1 million portfolio with Vanguard, your business means almost nothing to the firm. They have $6 trillion under management. There are 5,999,999 other $1 millions in $6 trillion. Think about that the … [Read more...]
Think Your ETF Portfolio is Diversified?
If you are buying ETFs because you hope to build a more diversified portfolio than you believe you can get by purchasing individual stocks, this chart is for you. The chart below from Bespoke dispels the myth that ETFs always provide adequate diversification. The chart shows the weighting of the top two holdings in each S&P 500 sector. Like many ETFs, the S&P 500 sector ETFs are market-capitalization-weighted. As you can see, the top two stocks are driving the ship in most sectors. In the Communications Services, Energy, and Technology sectors, the top two stocks account for about … [Read more...]
Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
The Vanguard Wellesley (VWINX) and Wellington (VWELX) funds are both balanced mutual funds managed by the Wellington Management company. Wellington and Wellesley both invest in dividend-paying stocks as well as bonds, but there are some crucial differences. We will explain the similarities and differences between Vanguard Wellesley and Wellington to help you decide which fund, if either, works best for you. Richard C. Young an Authority on Vanguard Wellesley & Wellington Young Research has followed both Wellesley and Wellington for over four decades. We aren’t aware of any … [Read more...]
Warning: Avoid Mutual Fund Year End Distributions
UPDATE: The end of the year is a great time to review your mutual fund year-end distributions. You should try to avoid them if possible. If you haven't done so already, read through Fidelity's primer on Mutual Funds and Taxes below. You don’t need to worry about year-end distributions with individual stocks. But with mutual funds, you absolutely need to worry. It’s why at Young Research we favor individual stocks in both our Retirement Compounders and Maximizers investment strategies. Here’s a primer on year-end distributions courtesy of Fidelity. Pay particular attention to tax strategies … [Read more...]
Vanguard GNMA Outlook 2020
What is the Outlook for the Vanguard GNMA Fund in 2020? GNMA bond prices like all bond prices are influenced by the level of interest rates and the outlook for interest rates. GNMA bonds are bonds that are backed by mortgages, so their prices tend to be influenced more by the level of long-term interest rates than by short-term interest rates, but both matter. The Federal Reserve has absolute control over short-term interest rates, but their policies heavily influence the level of long-term interest rates. What Does Interest Rate Policy Mean for Vanguard … [Read more...]
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