Just ignore market and economic forecasts
Stocks are about to plunge! Before you panic, this isn’t my forecast and it wasn’t made today. That was the warning from Wells Fargo strategist Gina Martin Adams on September 20, 2013. The S&P 500 index had closed the prior day at 1,726,...
The real risk of rising interest rates
More than three years ago, the bond “king,” PIMCO’s Bill Gross, announced that the world’s biggest bond fund had reduced its U.S. government-related debt holdings from 22 percent in December 2010 to just 12 percent in January 2011, at that...
Did you sell in May?
One of the more persistent investment myths is that it is a winning strategy to sell stocks in May and then wait to buy back into the market around November. The oft-repeated catch phrase is, “Sell in May and go...
Is there such a thing as smart beta?
“Smart Beta” is a term that is cropping up more lately in professional investment management circles. It is essentially a way that professional investors tweak index funds in hopes of achieving higher returns than funds that simply mimic an index....
What’s the best incentive scheme for fund managers?
Here’s an argument hedge fund marketers make to tout hedge funds’ superiority over mutual funds. They point out that unlike mutual fund managers, who are paid solely based on assets under management, hedge fund managers also receive incentive compensation. The...
Why do investors keep buying actively managed funds?
An overwhelming body of evidence shows that actively managed mutual funds underperform their appropriate risk-adjusted benchmarks. In addition, little to no evidence points to persistence of performance beyond the randomly expected, which means past performance isn’t prologue. That’s the reason...
Can past performance predict future performance?
Most investors are well aware of the SEC’s warning that past performance isn’t an indicator of future performance. That warning often leads to questions like: “If past performance isn’t predictive, why do you believe that the past outperformance of value...
Is it OK to keep your assets with one fund family?
One of the more frequently asked questions I get is about the need to diversify across mutual fund or exchange-traded fund providers: Is there risk in having all your eggs in one fund family’s basket? This question became even more...
How the mutual fund graveyard can hurt investors
The tendency for mutual fund companies to drop poorly performing funds when calculating historical return data is a major problem for unsuspecting investors, and it’s known as survivorship bias. An investor selecting mutual funds today is choosing from a list...
Is it OK to keep your assets with one fund family?
One of the more frequently asked questions I get is about the need to diversify across mutual fund or exchange-traded fund providers: Is there risk in having all your eggs in one fund family’s basket? This question became even more...
