Articles (1,224)

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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 more now number 211,275, making up .004% (1 in every 25,000) of ...Read More

Archive
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

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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

1216

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

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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

1214

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

1212

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

1211

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

1210

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

1209
Christopher Dennistoun

Livermore and Cutten—Rarer than Lions in Tennessee

437
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?

362
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

1206

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

1205

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

1202

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

1201

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

1200
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

1199

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

1198

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

1197

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

1192

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

1191

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

1190

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

1189

The Little Known Retirement Savings Vehicle – Cash Balance Plans, Part 1

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by Tom Allen and Mark Hebner — Friday, October 10, 2014

Saving for retirement always seems like a monotonous topic of discussion – the party killer if you will. Terms like 401(k), Safe Harbor, salary deferrals, Roth contributions, do not draw the same amount ...Read More

1188

A Summary of the 2005 SEC Study of Pension Consultants

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by Jay D. Franklin and Mark Hebner — Friday, October 10, 2014

In 2005, the Securities and Exchange Commissions (SEC) published a study of investment consultants who are hired by pension plans to pick managers for them. The SEC conducted focused examinations of ...Read More

1187

Do Investment Consultants Add Value?

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

Large institutional investors such as foundations, endowments, and pension plans spend billions of dollars on investment consultants on whom they rely to pick active managers. Recently, three researchers (two ...Read More

1186

Yet Another Problem with Active Investing: Manager Turnover

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by Mary Brunson and Mark Hebner — Thursday, October 9, 2014

The surprise exit of Bill Gross from PIMCO likely has scores of investment committee members scratching their heads, wondering how to handle their fixed income mandates. Gross had fostered a stunning ...Read More

1185

A Second Look at the Indian Mutual Fund Landscape

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by Jay D. Franklin and Mark Hebner — Wednesday, October 8, 2014

About eight months ago, one of our contacts in India (Jatin Visaria) sent us an analysis of fifty of the largest mutual funds domiciled in India that had at least fourteen years of returns data. We published ...Read More

1184
SCM

Wealth Management Parody

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by SCM — Monday, October 6, 2014

We found a great little Wealth Management Parody video from SCM we wanted to ...Read More

1183

Is Diversification Still Your Buddy?

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

The title above refers to a famous quote from Nobel laureate Merton Miller, who was a teacher to the Father of Modern Finance, Eugene Fama. It also refers to the fact that for the first three quarters of 2013, ...Read More

1182

The Third Quarter of 2014 in Review

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

In the third quarter of 2014, equities pulled back around the world, particularly for international developed markets. Portfolios tilted towards small cap and value companies performed worse than portfolios ...Read More

1181

The Value of Following IFA's Advice

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by Jay D. Franklin and Mark Hebner — Wednesday, October 1, 2014

What is the value of staying invested in a globally-diversified risk-appropriate portfolio regardless of what happens in the financial markets? Admittedly, this is very difficult to quantify because there is ...Read More

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Q&A with IFA: How Well Have the Funds in My 401(k) Performed?

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by Mark Hebner — Tuesday, September 30, 2014

  Question: I was recently informed by my company that the majority of the funds in our 401(k) plan have beaten their benchmarks as of 8/31/2014. I find myself somewhat skeptical. Can you please help me ...Read More

1179

Hedge Fund Shenanigans Uncovered by the SEC

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by Jay D. Franklin and Mark Hebner — Tuesday, September 30, 2014

While perusing the Wall Street Journal, we came across an article1 (“SEC Criticizes Hedge Funds”) that caught our attention. The Securities and Exchange Commission (SEC) recently completed ...Read More

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The Bond King Leaves PIMCO for Janus Capital

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by Jay D. Franklin and Mark Hebner — Monday, September 29, 2014

We were as shocked as everyone else when we learned that Bill Gross had resigned from PIMCO, and we were doubly shocked to learn that he was going to Janus Capital, a company not known for its bond funds. In ...Read More

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Is Indexing the End of Capitalism? We Don't Think So!

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by Jay D. Franklin and Mark Hebner — Thursday, September 25, 2014

Political commentator Jonathan Russo wrote an interesting article on Huffingtonpost.com called “Indexing and the End of Capitalism.” Although it had a great start by noting the arrival of the ...Read More

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Marlena Lee

How Much Income Do You Need in Retirement?

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by Marlena Lee — Wednesday, September 24, 2014

The answer, of course, is different for every person. In the video, Marlena Lee of Dimensional Fund Advisors explains how someone who is close to retirement can arrive at a reasonable estimate of what they ...Read More

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Frontier Markets—Tread Carefully Says FINRA

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

The frontier markets consist of developing countries that have not yet made it to or have dropped out of the category of emerging markets. Some examples would be Argentina, Lebanon, Nigeria, Slovenia, and ...Read More

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