Articles (1,101)

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When a Negative Is Actually a Positive

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by Jay D. Franklin and Mark Hebner
Monday, April 21, 2014

Last week, BlackRock Inc, the world’s largest money manager released its quarterly earnings report for the first quarter of 2014. Normally, we don’t pay much attention to these things, but something caught our eye in this Reuters story that we thought was worth ...Read More

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Connecting the Dots

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by Jim Parker, Dimensional Fund Advisors — Thursday, April 17, 2014

Human beings love stories. But this innate tendency can lead us to imagine connections between events where none really exist. For financial journalists, this is a virtual job requirement. For investors, it ...Read More

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Is a Health Savings Account Right for You?

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by Jay D. Franklin and Mark Hebner — Tuesday, April 15, 2014

A health savings account (HSA) is a tax-advantaged medical savings account for people who are enrolled in a high-deductible health plan (HDHP). For this purpose, an HDHP must have a minimum deductible of ...Read More

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Yet Another Voice Calls Attention to the Problem of High 401(k) Costs

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by Jay D. Franklin and Mark Hebner — Monday, April 14, 2014

In December of 2012, Demos, a liberal think tank, published The Retirement Savings Drain—The Hidden and Excessive Costs of 401(k)s. It caused quite a stir and provided much of the source material for the ...Read More

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Will "Go-Anywhere Funds" Get You to Your Destination?

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by Jay D. Franklin and Mark Hebner — Monday, April 14, 2014

When discussing the issue of style drift with prospective clients, we commonly hear an objection that goes something like, “Why should I care where my fund manager chooses to invest, as long as he is ...Read More

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When Mythology Is Confused with Reality

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by Jay D. Franklin and Mark Hebner — Friday, April 11, 2014

In the investment industry, the term “white paper” carries a lot of currency. As for what distinguishes an ordinary article from a full-fledged white paper, it is usually just a matter of length or ...Read More

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Morningstar Takes a Closer Look at Survivorship Bias

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by Jay D. Franklin and Mark Hebner — Wednesday, April 9, 2014

One of the problems with commonly cited mutual fund returns data is that it ignores the issue of survivorship bias, the tendency for mutual funds with poor performance to be merged into other funds or shut ...Read More

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The Gadfly from Yale Continues to Buzz the 401(k) Industry

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by Jay D. Franklin and Mark Hebner — Tuesday, April 8, 2014

Last year, we wrote about the exploits of Professor Ian Ayres of Yale Law School. You may recall him as the fellow who sent letters to 6,000 plan sponsors whom he identified as having especially high expenses. ...Read More

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Seven Ways to Fool Yourself

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by Jim Parker — Tuesday, April 8, 2014

The philosopher Ludwig Wittgenstein once said that nothing is as difficult for people as not deceiving themselves. But while most self-delusions are relatively costless, those relating to investment can come ...Read More

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The First Quarter of 2014 in Review

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by Jay D. Franklin and Mark Hebner — Friday, April 4, 2014

In the first quarter of 2014, risk was rewarded, but not to the extent to which we may have become accustomed to in 2013. With the exception of emerging markets and emerging markets value, all of the specific ...Read More

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How Concerned Should You Be about a "Rigged" Stock Market?

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by Jay D. Franklin and Mark Hebner — Wednesday, April 2, 2014

Unless you have been hiding under a rock the past few days, you have doubtlessly heard about Michael Lewis’s new book, Flash Boys: A Wall Street Revolt. Perhaps you saw the Sixty Minutes interview of ...Read More

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The 4% Retirement Spending Rule: Is It Still Relevant?

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by Jay D. Franklin and Mark Hebner — Monday, March 31, 2014

The 4% retirement spending rule was developed 20 years ago by William P. Bengen, a financial planner who published his results in the Journal of Financial Planning. Essentially, the 4% rule says that retirees ...Read More

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International Diversification vs. Home Bias

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

In a recent article on the concept of advisor's alpha, Vanguard emphasized the importance of advisor’s putting their clients into portfolios that they are unlikely to trade under varying market ...Read More

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Confessions of an Active Manager

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

Recently, one of our fans in India sent us a fascinating article by his fellow countryman, Mehrab Irani who has had the responsibility of managing active mutual funds for a large fund family. As we have noted ...Read More

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How Smart is Your Beta?

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by Jay D. Franklin and Mark Hebner — Sunday, March 23, 2014

At Index Fund Advisors, we are always keeping an ear out for new terminology that appears in the investment marketplace. Recently, there has been a lot of talk about “smart beta”. Recall that beta, ...Read More

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A New Low for CNBC

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by Jay D. Franklin — Friday, March 21, 2014

With nothing better to do the other night, I decided to try out CNBC’s new series, Money Talks, a reality show that follows the antics of one Steve Stevens and his company VIP Sports of Las Vegas which ...Read More

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Consumer Price Index and Consumption

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

Economists discuss the choices people make with their income as some allocation of consumption and savings. They remind us that we apply our human capital (our skills and time) to earn financial capital (our ...Read More

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The Continuing Wisdom of the Oracle of Omaha

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

“Games are won by players who focus on the playing field -- not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on ...Read More

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Capturing Portfolio Returns: Simple but not Easy

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

Throughout the IFA Website, you will find long-term historical returns of the IFA Index Portfolios and the asset classes that make up those portfolios. One example is the table of Simulated Passive Investor ...Read More

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Pension-Gate Continues: North Carolina is on Notice

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

Those of you who are long-time followers of ifa.com are probably aware of the attention we have given to the very large problem of mismanagement of public pension plan funds. Thanks to diligent research that ...Read More

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Vanguard Takes a Deeper Dive into Advisor's Alpha

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

A little more than a month ago, we published this article that introduced the concept of advisor’s alpha as the value added by passive advisors who adhere to the principles of controlling costs, ...Read More

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The Big Tease Continues

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

Take a walk past the financial section of your local newsstand, and you are likely to be greeted with headlines like “Ten Hot Stock Picks for 2014!” or “The Top Ten Mutual Funds to Buy ...Read More

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Dimensional vs Vanguard

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by Mark Hebner — Monday, March 10, 2014

We are sometimes asked what the difference is between ...Read More

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A Brief History of the Efficient Markets Hypothesis

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

In 2008, Nobel laureate Eugene Fama delivered a brief lecture to the American Finance Association. The entire 30-minute video is included above, and it is well worth an investment of your time. Fama was ...Read More

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When It Pays to Be Patient

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

One of the reasons that Index Fund Advisors advises the use of Dimensional funds is their patient and opportunistic approach to trading which differentiates them from traditional index fund providers. All too ...Read More

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The Gambler's Fallacy and the Misuse of the Law of Large Numbers

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

If you have ever spent any time in a casino, it is likely that you have seen supposedly random events that appeared to be non-random. Perhaps the roulette wheel came up red seven times in a row, for example. ...Read More

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The Tax Treatment of Investment Management Fees

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

Around this time of the year, we are frequently asked about the tax deductibility of investment management fees. The answer, like most things related to the tax code, is not a simple one. In general, when paid ...Read More

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The SAC Insider Trading Scandal—Yet Another Domino Falls

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

Mathew Martoma, a former SAC Capital Advisors portfolio manager, was convicted today of helping his company earn more than a quarter billion dollars illegally through trades based on material, non-public ...Read More

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The Golden Ticket Trap

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by Jim Parker — Thursday, February 6, 2014

In a popular children’s story, the young hero pins all his hopes on finding one of a handful of “golden tickets” hidden among millions of candy bars. It seems many people approach investing ...Read More

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Are Investors Irrational When It Comes to American Funds?

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

A recent edition of the Rekenthaler Report from Morningstar would have us believe that American Funds have suffered investor withdrawals due to a guilt-by-association with active management which has ...Read More

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2013: A Record Year for Indexing

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

At Index Fund Advisors, we are always delighted to see articles such as this one from Bloomberg.com which shows the unabated march of indexing across the investment universe. For 2013, investors poured in a ...Read More

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Q4/2013: Quarterly Market Review Summary

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

Overall, it was a very good quarter for equities, the one exception being real estate investment trusts (REITs) which were down 1%. U.S. bonds were down slightly, but Global bonds showed a gain of 0.44%. ...Read More

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The Alleged Inefficiency of Emerging Markets and Other Baloney

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

At Index Fund Advisors, we often hear from people all over the world who express an interest in the investment principles that we espouse. This pleases us greatly, as we have always felt that the benefits of ...Read More

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SEC Issues Risk Alert on Alternative Investments

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

At Index Fund Advisors, we have never advised our clients to engage with alternative investments such as hedge funds, private equity funds, or funds of private funds. A recent alert from the Securities and ...Read More

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Advisor's Alpha: The View from Vanguard

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

At Index Fund Advisors, we have repeatedly cautioned investors to avoid getting ensnared in the never-ending pursuit of alpha by either picking stocks or hiring an active manager to pick stocks on their ...Read More

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Morningstar's Fund Managers of the Year

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

Can you hear it? That is the sound of millions of index fund investors yawning in response to Morningstar’s announcement of its Fund Managers of the Year for 2013. That recent performance weighs very ...Read More

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Comments on Barron's Dimensional Fund Advisors Profile [VIDEO]

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by Mary Brunson and Mark Hebner — Friday, January 17, 2014

"Active management is a zero-sum game, and that's before costs. That's not opinion, that's math." --Eugene Fama, 2013 Nobel Prize in Economics, Professor of Finance, Chicago Booth, as quoted in Barron's, ...Read More

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A Fascinating PBS Frontline Documentary

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by Jay D. Franklin and Mark Hebner — Thursday, January 16, 2014

For the past year, we have been following the story of billionaire Steven Cohen’s SAC Capital, particularly its unprecedented indictment followed by a guilty plea and a record $1.8 billion ...Read More

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Is a Portfolio of Individual Dividend-Paying Stocks Better Than an Index Portfolio?

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by Mark Hebner — Tuesday, January 14, 2014

Question: Rather than investing in a portfolio of index funds, would I not be better off by simply assembling a collection of well-known individual stocks that have a history of increasing their ...Read More

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2013: Another Dismal Year for Hedge Funds

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by Jay D. Franklin and Mark Hebner — Saturday, January 11, 2014

“We active folks have done a horrible job of beating the benchmarks.” So says Bob Doll of Nuveen Investments who was recently interviewed by Jeff Macke of Yahoo! Finance’s Breakout. For 2013, ...Read More

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Asset Location

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by Mark Hebner — Friday, January 10, 2014

An additional way that a passive advisor can add value is not just asset allocation but asset location. Specifically, for a client that has a mixture of taxable accounts, traditional IRAs, and Roth IRAs, it is ...Read More

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Liquidity: Is It a Risk Factor?

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by Jay D. Franklin and Mark Hebner — Thursday, January 9, 2014

According to Investopedia, liquidity is defined as the degree to which an asset can be bought or sold in the market without affecting the asset’s price. If you have ever attempted to sell a large block ...Read More

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Surprise! No Selloff in 2013

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by Weston Wellington — Wednesday, January 8, 2014

The unusually strong performance of US stocks in 2013 was a welcome surprise for investors who are following a simple buy-and-hold strategy and a source of exasperation for many professionals caught flatfooted ...Read More

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Barron's Article on Dimensional Fund Advisors

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by Jay D. Franklin and Mark Hebner — Monday, January 6, 2014

Beverly Goodman of Barron’s was accorded the high honor of being the first reporter to attend one of DFA’s Financial Advisor Colleges. The article that she wrote about her experience, A Different ...Read More

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The 2013 4th Quarter and Year-End Review

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by Jay D. Franklin and Mark Hebner — Thursday, January 2, 2014

In the fourth quarter of 2013, risk was rewarded for all classes of equities except REITs, and fixed income remained essentially flat. Once again, there was a lot of discussion surrounding future Fed policy, ...Read More

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IFA by the Numbers

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by Mark Hebner — Thursday, January 2, 2014

IFA by the Numbers tells the story of IFA since March of ...Read More

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Selecting Investments Part 2

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by Mark Hebner — Thursday, January 2, 2014

IFA has known the DFA leadership since 1999 and they have remained committed to fostering a culture of learning, teamwork, innovation, and dedication to always doing what’s right for ...Read More

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President Index Funds Advisors

The Resilience of Capitalism

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by Mark Hebner — Wednesday, January 1, 2014

As of the end of 2013, the S&P 500 Index has not only fully recovered from the 51% drop that began in late 2007 and lasted through March of 2009, it has actually gained 37% beyond the high point in 2007, ...Read More

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A Retrospective on 2013 Predictions

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by Jay D. Franklin and Mark Hebner — Tuesday, December 31, 2013

“Prediction is very difficult, especially if it’s about the future.” -Nils Bohr   “Stocks are about to plunge, Wells Fargo warns.” According to strategist Gina Martin Adams, ...Read More

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A Difficult Year for Gold and Silver

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by Jay D. Franklin and Mark Hebner — Thursday, December 26, 2013

Although we haven't seen too many of them lately, it is easy to recall the advertisements and doomsday books touting gold and silver as investments that inundated ...Read More

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