This post I wrote on September 25 was one of readers' favorites this year. My concerns with the Vanguard Precious Metals and Mining Fund should be taken seriously. I'm concerned about Vanguard more broadly as well, and have written a series on that here.  Barron’s had a solid write-up on gold over the weekend. “Gold has been a traditional hedge against financial and economic crises, playing that role during the 2008-09 meltdown. Gold rallied 17% from the collapse of Lehman Brothers on Sept. 15, 2008, until the stock market bottomed on March 9, 2009—a period during which the S&P 500 fell … [Read more...]

In recent years pension funds have paid more and more in fees to private equity funds, but it turns out that the returns generated by the funds don't seem to justify the high cost. Bloomberg's Stephen Gandel reports: The returns provide little justification for that. New York City said in its report that its private equity portfolio since inception in the late 1990s had returned about 3 percentage points less a year — 10.3 percent compared with 13.1 percent — than if that money had been invested in public markets. Private equity firms, which often show returns that exceed public markets, say … [Read more...]

Active bond managers are beating their passive peers by protecting portfolios from rising interest rates. Asjylyn Loder reports for The Wall Street Journal: Higher-priced portfolios pieced together by active money managers are handily beating the cheaper index-tracking competition, largely because they are doing a better job protecting their portfolios from rising interest rates. Investors have bulked up on passively managed portfolios since the financial crisis amid a steady drumbeat of evidence showing that most managers can’t beat the market, especially after fees. But fixed-income … [Read more...]

My quick answer is no. Because everywhere I turn there’s yet another ETF being formed and an article espousing their benefits. And with Wall Street firms plastering their names on all sorts of ETFs, the landscape has become littered with products that would feel more at home on the Vegas Strip. Investors be warned: Passive investing basically guarantees benchmark returns. Make sure your portfolio doesn’t rely too much on the wrong measuring stick. As Robert Powell reports in USA Today, it's also a good idea to avoid newly launched ETFs: Well-known, long-established indices are better … [Read more...]

Jason Zweig, writing at The Wall Street Journal, details some inexplicable behavior by mutual fund managers, including generating massive tax bills for owners. You should try to avoid funds doing things like this. He writes: Mutual funds made one hot mess out of August. On Aug. 10, Fidelity Investments conducted stock splits on some of its biggest funds, cutting their per-share prices by a factor of 10 while giving investors 10 times as many shares -- a gesture that leaves shareholders exactly where they were before. On Aug. 22, Harbor Capital Advisors, which runs the $20 billion Harbor … [Read more...]