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...]
Avoid Buying Mutual Funds Doing This
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...]
The Problem With Mutual Funds Today
One of the problems facing long-term, patient investors using mutual funds and ETFs is that many of their fellow investors are traders. It’s why we favor individual stocks where you call the shots. Asjylyn Loder reports in The Wall Street Journal on the volatile nature of fund flows, writing: BlackRock said Monday it received $20 billion in net inflows in the second quarter. While the sum is enormous, it was down from more than $100 billion a year ago. BlackRock is the world’s largest asset manager and a bellwether of low-cost index-based investing. BlackRock isn’t alone: For the first six … [Read more...]
This is One Ugly Looking Chart
Emerging markets stocks have gotten clubbed since hitting a high in January. The iShares Emerging Markets ETF is down 14% from its January peak and more than 5% on the year. And if you believe the charts, EM could hit an air pocket before the asset class sees support. For what was one of the most lauded investments of year, it has been an ugly five months. … [Read more...]
Crisis at Vanguard: Part I
Originally posted August 1, 2016. Vanguard Dividend Growth Closes to New Investors No, it is not the end of the world, but if you are a loyal Vanguard investor, as am I, having one of the few dividend-based funds in the world I advise for purchase close is a “Vanguard Crisis” for me as well as for many individual investors. How is this “Crisis at Vanguard” going to play out for the individual investor? I have been anticipating this “Crisis at Vanguard” for a long time. And it is going to become a broadening industry crisis, not just a “Crisis at Vanguard.” The handful of big mutual … [Read more...]
If You Need More Reasons to Like GNMA, Read This
When times are tough Vanguard GNMA, managed by Wellington Management, has been an absolute force for retired and soon-to-be retired investors. Pay attention here. We’ve already had two substantial cracks in the market so far this century. Originally posted on Yoursurvivalguy.com. … [Read more...]
“E.J., What’s Going on with Vanguard GNMA?”
“E.J., what’s going on with Vanguard GNMA?” my mother asked me the other day. “Hi mom” I said. “Hang in there.” Hard to believe but Vanguard GNMA is yielding just over three percent today. Yes, its price is down but you only lose when you sell. And I’m not selling. I’m buying more at lower prices and taking the three percent. Because it’s a three percent world. I’m just living in it. “How about bank CDs?” you might ask. I see the teaser rates out there. But you can feel like a mouse on a wheel chasing rates and locking in FDIC protection. You can put a lot of money in Vanguard GNMA and … [Read more...]
Your Pre-Retirement Years: A Straightforward Way to Earn Over 9% with Vanguard Wellesley
Over the past year, the total return for Vanguard Wellesley has been just over five and half percent. “Five and a half percent? What’s so great about that,” you might think. Well, it can be great if you’re a patient investor and you allow the miracle of compound interest, what Albert Einstein is said to have referred to as the eighth wonder of the world, to work its magic for you. Father Time can be your friend, as I will explain in a moment. Yesterday, I was speaking with a client whom I’ve been working with since his mid-50s. He’s in his early 70s now but it hardly feels like close to … [Read more...]
Yes, Vanguard is too Big: Part II
Has there ever been a bigger supporter of Vanguard than Dick Young whom, unlike other promoters and hucksters out there today, never had a horse in the race? And could there be a better triple play combo than Wellington Management, Vanguard, and Dick Young’s approval? Vanguard’s low-cost expense ratios, no 12b-1 fees, and its history with Wellington Management were, among other valuable investor tenets, enough to recommend Vanguard to you. Buying Vanguard Wellington and Wellesley was simple. Owning them gave you a balanced portfolio with a stock to bond mix of 60/40 or 40/60. There … [Read more...]
Vanguard GNMA and Your Retirement Years
When the financial crisis destroyed the stock market in 2008, guess which fund weathered the storm? You guessed it Vanguard GNMA. When the tech bust destroyed the stock market at the beginning of this century, guess which fund weathered the storm? Right again, Vanguard GNMA. That’s two huge busts in the stock market so far this century. Many mutual funds focus on 10-year performance. As 2018 moves forward into 2019, the brutal losses of 2008 will be rolled off, and investors may not see the risk inherent in stock funds as they make their allocation decisions. But a retirement lasts … [Read more...]
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