Articles (1,239)

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When a Chinese Wall Is Not Something to Toy With

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by Jay D. Franklin and Mark Hebner
Monday, December 22, 2014

In the wake of the dot-com bust of the early 2000s, you may recall how we were promised that going forward there would be a “Chinese wall” or a “firewall” between the research and investment banking departments of the Wall Street investment banks ...Read More

Archive
1238

Americans Continue to Get Failing Grades on Retirement Readiness

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by Jay D. Franklin and Mark Hebner — Friday, December 19, 2014

We have published many articles about the woeful state of financial literacy in America. Just when we thought it could not get any worse, along comes this story from the American College of Financial Services. ...Read More

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Some Interesting New Data on 401(k) Plans

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by Jay D. Franklin and Mark Hebner — Thursday, December 18, 2014

BrightScope and the Investment Company Institute recently collaborated to produce this report on the current state of 401(k) plans based on BrightScope’s database of over 35,500 plans. As of 6/30/2014, ...Read More

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Retirement Ready? Get Ahead of the Curve with Target Date Index Portfolios

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by Mary Brunson and Mark Hebner — Wednesday, December 17, 2014

"While fiduciary responsibilities will always be top of mind, their [plan sponsors'] needs are becoming more complex as all parties recognize the difficulties employees are facing in saving for retirement." ...Read More

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A Golden Age for Active Investing? We Think Not!

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by Jay D. Franklin and Mark Hebner — Wednesday, December 17, 2014

Alexander Friedman of GAM Holding AG recently opined on CNBC.com that (to paraphrase Mark Twain) the recent reports of the demise of active managers are greatly exaggerated. Friedman acknowledges the mass ...Read More

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A Respectful Disagreement with St. Jack

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by Jay D. Franklin and Mark Hebner — Tuesday, December 16, 2014

Anyone who has spent a significant amount of time on our Website will know that we have nothing but the highest respect for Jack Bogle, the Father of Indexing for Retail Investors. Recently, however, we saw ...Read More

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What the Capitalization Rate from Real Estate Teaches Us about Investing

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by Jay D. Franklin and Mark Hebner — Monday, December 15, 2014

The capitalization rate (or cap rate) on a real estate investment property is defined as its yearly net income divided by its price. For example, suppose we have two apartment buildings, both of which have net ...Read More

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What Can We Read into the Increase in the VIX Index?

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by Jay D. Franklin and Mark Hebner — Friday, December 12, 2014

As noted in this CNBC article, The CBOE Volatility Index (VIX) which is widely interpreted to be an indicator of fear has risen by 40% (actually 57% based on the 12/10/2014 close) over the three trading days ...Read More

1231

Living with Volatility, Again

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by Jim Parker — Thursday, December 11, 2014

Volatility is back. Just as many people were starting to think markets only ever move in one direction, the pendulum has swung the other way. Anxiety is a completely natural response to these events. Acting on ...Read More

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Two Nobel Laureates—Two Views of Smart Beta

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by Jay D. Franklin and Mark Hebner — Thursday, December 11, 2014

Smart beta appears to be all the rage in the investment world right now. According to this Financial Times article citing Morningstar data, there were 673 smart beta exchange-traded products representing just ...Read More

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Even More Bad News for Active Managers

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by Jay D. Franklin and Mark Hebner — Wednesday, December 10, 2014

On the heels of this story that we just published regarding the difficult times faced by active managers of large cap funds comes this piece from Reuters which states, “Stock-picking fund managers are ...Read More

1228

Fallen Oil Prices: A Nice Tailwind for the Market

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by Jay D. Franklin and Mark Hebner — Thursday, December 4, 2014

One of the leading market-related stories of 2014 is the drop in oil prices. From the beginning of the year through the end of November, the price per barrel has dropped by about 33%, closing at just under ...Read More

1227

Large Cap Active Managers on Track for Record Low Performance

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by Jay D. Franklin and Mark Hebner — Wednesday, December 3, 2014

As we were enjoying our Thanksgiving Day weekend, this Jason Zweig column in the Wall Street Journal caught our attention.  Zweig quotes Denys Glushkov, a senior researcher at Wharton Research Data ...Read More

1226

An Enormous Waste of Money

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by Jay D. Franklin and Mark Hebner — Friday, November 28, 2014

Just how much do investors spend every year on active management fees in pursuit of the ever-elusive alpha? How does $600 billion (or roughly the GDP of Switzerland) grab you? This unfathomably large number ...Read More

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Ebola Stocks: Avoid them like the Plague!

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by Jay D. Franklin and Mark Hebner — Wednesday, November 26, 2014

So says the U.S. Securities and Exchange Commission (SEC) which recently suspended trading for ten business days in the stocks of four companies that claim to be developing products or services in response to ...Read More

1224

Some Interesting Facts about the Ultra Wealthy

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by Jay D. Franklin and Mark Hebner — Tuesday, November 25, 2014

A few days ago, a client directed our attention to this CNBC article about ultra-high net worth (UHNW) people around the world. According to a report issued by UBS and Wealth-X, individuals worth $30 million ...Read More

1223

Vanguard Studies the Performance of College Endowments

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by Jay D. Franklin and Mark Hebner — Monday, November 24, 2014

Every Year, the National Association of College and University Business Officers (NACUBO) releases its study of the performance of college endowments. From the data in their press release, we created this ...Read More

1222

Can You Rely on Mean Reversion to Outsmart the Market?

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by Jay D. Franklin and Mark Hebner — Friday, November 21, 2014

Mean reversion is the idea that following a period of above-average returns, there is more likely to be a period of below-average returns and vice versa. It can be applied not just to the overall stock market ...Read More

1221

What Some Researchers Learned from Visits to Financial Advisers

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by Jay D. Franklin and Mark Hebner — Thursday, November 20, 2014

“The Market for Financial Advice: An Audit Study” is a working paper from the National Bureau of Economic Research. The three authors set up 284 contrived visits to Boston-area financial advisors ...Read More

1220

Currency Trading: How to Be Quickly Parted from Your Money

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by Jay D. Franklin and Mark Hebner — Wednesday, November 19, 2014

Regarding currency trading, you may have recently seen or heard a commercial such as this one which we found highly reminiscent of the brokerage commercials that aired during the 1990s portraying fictitious ...Read More

1219

Smart Beta: Nothing New Under the Sun

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by Jay D. Franklin and Mark Hebner — Tuesday, November 18, 2014

In our daily perusal of investment-related articles, we came across this article1 from the Financial Times claiming that “smart beta is eating active managers’ lunch.” As we have previously ...Read More

1218

The Funded Ratio: An Actuarial Approach to Retirement Spending

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by Jay D. Franklin and Mark Hebner — Monday, November 17, 2014

In a recent Financial Professional Outlook, Russell Investments surveyed 234 financial advisors across 145 investment firms nationwide. According to their results, 60% of advisors said that more than half of ...Read More

1217

Understanding the Different Types of Retirement Plan Fiduciaries

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by Jay D. Franklin and Mark Hebner — Friday, November 14, 2014

The Employee Retirement Income Security Act (ERISA) defines the roles and responsibilities of various fiduciaries for defined contribution retirement plans. In this article, we will attempt to clarify what ...Read More

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Popularity: An Elegant New Paradigm for Understanding Risk and Return

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by Jay D. Franklin and Mark Hebner — Thursday, November 13, 2014

The recently published 40th anniversary issue of the Journal of Portfolio Management features an article titled “Dimensions of Popularity” by Roger Ibbotson and Thomas Idzorek. Ibbotson is perhaps ...Read More

1215

Q&A with IFA: Is Private Real Estate Superior to Publicly-Traded REITs?

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by Jay D. Franklin and Mark Hebner — Wednesday, November 12, 2014

Question: I have heard that private real estate deals offer higher yields or better returns than publicly-traded real estate investment trusts (REITs). Is it worth my time to seek out private real estate ...Read More

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When a "Happiness Letter" Is Not Cause for Celebration

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by Jay D. Franklin and Mark Hebner — Tuesday, November 11, 2014

One of our favorite financial columnists, Jason Zweig of the Wall Street Journal, wrote this piece warning clients of brokerage firms to beware of “happiness letters”. Even though we thought we ...Read More

1213

Pimco Continues to Bleed Cash

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by Jay D. Franklin and Mark Hebner — Monday, November 10, 2014

Since the departure of Bill Gross from Pimco on September 26th, its flagship Total Return fund has suffered investor withdrawals of $51 billion, according to this excellent Wall Street Journal article by ...Read More

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A Great New Video: How to Win the Loser's Game [VIDEO]

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by Mark Hebner — Friday, November 7, 2014

Here is a full-length landmark documentary by SensibleInvesting.tv, How to Win the Loser’s Game.  It is well worth your time to watch every minute of it.  It is about 80 minutes long ...Read More

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The 40th Anniversary of a Classic Investment Article

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by Jay D. Franklin and Mark Hebner — Friday, November 7, 2014

We have recently marked the 40th anniversary of Nobel Laureate (and father of random walk theory) Paul Samuelson’s Challenge to Judgment which originally appeared in the Journal of Portfolio Management. ...Read More

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The Darkest of Days for Active Management

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by Jay D. Franklin and Mark Hebner — Thursday, November 6, 2014

“Active management has never been in worse repute—this is the darkest of days.” ...Read More

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Christopher Dennistoun

Livermore and Cutten—Rarer than Lions in Tennessee

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by Christopher Dennistoun — Wednesday, November 5, 2014

Edwin Lefevre’s, Reminiscences of a Stock Operator, is possibly the greatest book on the stock market ever written. But while every trader knows it by repute, most of us fail to appreciate its lessons. ...Read More

1208

Scientific Stock Speculation: An Oxymoron?

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by Jay D. Franklin and Mark Hebner — Tuesday, November 4, 2014

“The public as whole, buys at the wrong time and sells at the wrong time.” ...Read More

1207

When the Law Takes a Dim View of Cherry-Picking

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by Jay D. Franklin and Mark Hebner — Monday, November 3, 2014

As the Securities and Exchange Commission admonishes newly-registered investment advisers on its Website, “As an investment adviser, you are a ‘fiduciary’ to your advisory clients. This means ...Read More

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The Wisdom of a Stock Operator

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by Jay D. Franklin and Mark Hebner — Sunday, November 2, 2014

“Stock operator” is a term that is now obsolete. It essentially describes someone who makes a living by trading or speculating in individual stocks. Given the computerization of trading with the ...Read More

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Towers Watson Revisits the Gotrocks Family

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by Jay D. Franklin and Mark Hebner — Friday, October 31, 2014

In his 2005 shareholder letter, Warren Buffett envisioned a hypothetical family (the Gotrocks) who just happened to own all the companies in America. While each family member could have been content to simply ...Read More

1204

Investors Continuing to Be Their Own Worst Enemy—Evidence from the Fed

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by Jay D. Franklin and Mark Hebner — Thursday, October 30, 2014

With the S&P 500 Index up about 170% from its low point in March of 2009, investors should have cause for rejoicing. Unfortunately, it now appears that many investors were there for the risk but did not ...Read More

1203

Enhancing Returns in Passively Managed Bond Funds

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by Jay D. Franklin and Mark Hebner — Wednesday, October 29, 2014

While the title of this article may seem like an oxymoron, it definitely does not refer to the activity of seeking out mispriced bonds, for the bond market is efficient, with prices incorporating investor ...Read More

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Can Managers Pick Managers?

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by Jay D. Franklin and Mark Hebner — Tuesday, October 28, 2014

Your mother may have taught you that cheaters never prosper, but what about copycats? When it comes to mutual fund managers, the answer is sometimes, but not for long, at least according to three researchers ...Read More

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More Troubled Waters for Hedge Funds

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by Jay D. Franklin and Mark Hebner — Monday, October 27, 2014

A few months ago, we published this article about the difficulties faced by hedge funds and alternative strategy mutual funds in delivering acceptable returns to their shareholders. Since that time, the ...Read More

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Massi De Santis

Research in Focus: How Much Should You Save for Retirement?

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by Massi De Santis — Friday, October 24, 2014

How much should you be saving for retirement? In this video, Massi De Santis, PhD, explains that the answer should be customized for each individual, based on how their income grows prior to ...Read More

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Memo to Pimco: Don't Mess with St. Jack!

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by Jay D. Franklin and Mark Hebner — Friday, October 24, 2014

Those of us who follow the financial media have been treated to a verbal slugfest featuring the Father of Retail Index Funds, Jack Bogle, going against Pimco Managing Director James Moore. It began with Mr. ...Read More

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IRS Increases Allowed Retirement Plan Contributions for 2015

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by Internal Revenue Service — Thursday, October 23, 2014

The Internal Revenue Service today announced cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Many of the pension plan limitations ...Read More

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Pension-Gate: The Repercussions of CalPERS' Hedge Fund Decision

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by Jay D. Franklin and Mark Hebner — Thursday, October 23, 2014

About a month ago, we published this article about the $300 billion California Public Employees’ Retirement System (CalPERS) deciding to terminate its $4 billion hedge fund program. Today, we were ...Read More

1196

When a White Paper Should Be Ignored

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by Jay D. Franklin and Mark Hebner — Wednesday, October 22, 2014

In the investment industry, a claim that is backed up by a white paper takes on an aura of invincibility or unassailability. We at Index Fund Advisors find this to be an unfortunate state of affairs, for as we ...Read More

1195

How to Improve Your Economic Forecast

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by Jay D. Franklin and Mark Hebner — Tuesday, October 21, 2014

Knowing that we at Index Fund Advisors do not engage in economic forecasting, you can safely assume that the above title is meant to be facetious, just like this Wall Street Journal opinion piece titled ...Read More

1194

The Google Effect?

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by Jim Parker — Monday, October 20, 2014

What can’t Google do? Free email, customized searches, maps, apps, browsers, video—the list goes on. Now researchers claim to have found a link between Google searches and future stock market ...Read More

1193

The Five Qualifications of a Risk Premium

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by Jay D. Franklin and Mark Hebner — Monday, October 20, 2014

How can we determine whether or not we have identified an exploitable risk premium—a source of higher expected returns that we can implement in our portfolios? To understand the concept of a risk ...Read More

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Year-End Fund Distributions & Portfolio Management

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by Tom Allen and Mark Hebner — Friday, October 17, 2014

At Index Fund Advisors, it is standard operating procedure for us to tailor how we manage client portfolios at year-end in anticipation of dividend and capital gains distributions from the mutual funds that we ...Read More

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When Stock Speculation Was Rampant in San Francisco

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by Jay D. Franklin and Mark Hebner — Tuesday, October 14, 2014

About a decade after the California Gold Rush came a silver rush resulting from the discovery of the Comstock Lode in Nevada. What distinguished the latter from the former was that the bulk of the people who ...Read More

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Supreme Court: Time Doesn't Heal All Wounds

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by Jay D. Franklin and Mark Hebner — Monday, October 13, 2014

We are quite pleased to learn about two recent court rulings on a topic that is very important to us, fiduciary protection in retirement plans. Both rulings rejected arguments that the plan sponsor defendants ...Read More

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