Articles From Tom Allen and Mark Hebner (181)

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  • Tom Allen and Mark Hebner

    Vanguard vs. Dimensional: Through A Statistical Lens

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    by Tom Allen and Mark Hebner — Tuesday, March 13, 2018

    As advocates for passive investing, it is a common question amongst clients and prospects about why our 100 IFA Index Portfolios utilize strategies from Dimensional Fund Advisors versus better-known passive fund companies such as Vanguard or iShares. The answer is quite simple: ...Read More

  • Tom Allen and Mark Hebner

    Richard Thaler's Nobel Prize and Practical Implications for Investors

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    by Tom Allen and Mark Hebner — Tuesday, November 14, 2017

    Professor Richard Thaler from the University of Chicago received the 2017 Nobel Memorial Prize in Economic Sciences for his work in behavioral finance. This comes just four years after his colleague, Eugene Fama, received his Nobel Memorial Prize for his work on asset pricing ...Read More

  • Tom Allen and Mark Hebner

    2017 Year-End Distributions & Portfolio Management

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    by Tom Allen and Mark Hebner — Monday, November 6, 2017

    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 buy. The gist of this strategy is that we do not want to buy into ...Read More

  • Tom Allen and Mark Hebner

    Are Index Funds Evil or Just a Scapegoat for a Much Bigger Concern?

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    by Tom Allen and Mark Hebner — Tuesday, October 31, 2017

    In the September 2017 issue of The Atlantic magazine, an article entitled “Are Index Funds Evil?” caught the attention of us, and what we would suspect, the attention of many passive investors. The crux of the argument made has to deal with shareholder ...Read More

  • Tom Allen and Mark Hebner

    What About A Reverse Glide Path Strategy?

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    by Tom Allen and Mark Hebner — Tuesday, October 24, 2017

    Most investors are aware of the standard “age in bonds” asset allocation strategy. Naturally, as you get older the higher your allocation to bonds. A 20 year old would have an 80/20 stock/bond split while a 70 year old would have a 30/70 stock bond split. The ...Read More

  • Tom Allen and Mark Hebner

    2017 Q3 Market Review

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    by Tom Allen and Mark Hebner — Thursday, October 19, 2017

    Markets delivered strong positive results across the board in the 3rd Quarter of 2017. International Developed Markets and Emerging Markets continued their outperformance of the U.S. In the U.S., companies posted profit growth not seen in close to six years, factory-sector ...Read More

  • Tom Allen and Mark Hebner

    Broker-Dealers, Fees, and Bad Internal Controls

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    by Tom Allen and Mark Hebner — Tuesday, October 10, 2017

    We at Index Fund Advisors provide many reasons why investors should steer clear of actively managed mutual funds. Mainly, they have failed to deliver on their proposed value proposition: excess risk-adjusted returns (i.e. “alpha”). The number that has delivered is ...Read More

  • Tom Allen and Mark Hebner

    The Doomsday Portfolio: Is There Merit?

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    by Tom Allen and Mark Hebner — Thursday, October 5, 2017

    Many investors remember the most recent financial crisis and the toll that it took, not only on their retirement portfolio, but also their sanity. The subsequent impact of this event left many jaded in terms of trusting markets with their long-term savings. One of the ...Read More

  • Tom Allen and Mark Hebner

    Franklin Templeton: A Deeper Look at the Performance

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    by Tom Allen and Mark Hebner — Wednesday, September 27, 2017

    Franklin Templeton is one of the biggest asset managers in the world. Celebrating its 70th Anniversary this year, Franklin Templeton has become a household name among retail and institutional investors alike. Based out of San Mateo, CA, Franklin Templeton manages approximately ...Read More

  • Tom Allen and Mark Hebner

    Are Small Cap and Value Tilts Active Bets Against the Market?

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    by Tom Allen and Mark Hebner — Tuesday, September 19, 2017

    For the investors who are familiar with the known dimensions of expected return (size, relative-price, profitability, etc.), chances are that you have decided to tilt your portfolio accordingly. IFA’s 100 Index Portfolio also tilt our asset allocation towards small cap and ...Read More

  • Tom Allen and Mark Hebner

    Loomis Sayles: A Deeper Look at the Performance

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    by Tom Allen and Mark Hebner — Tuesday, September 5, 2017

    Boston based asset manager, Loomis Sayles, has been around since just before the Great Depression. As of March 31, 2017, they manage close to $250 billion in assets under management across 10 mutual fund strategies, institutional separate accounts, collective trusts, and hedge ...Read More

  • Tom Allen and Mark Hebner

    Parnassus Investments: A Deeper Look at the Performance

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    by Tom Allen and Mark Hebner — Tuesday, August 29, 2017

    Harvard Business School graduate Jerome L. Dodson founded San Francisco-based Parnassus Investments in 1984. Launching their first investment strategy in 1984, the Parnassus Fund (PARNX), with an eye towards responsible investing, one of the distinguishing characteristics of ...Read More

  • Tom Allen and Mark Hebner

    Newly Issued Fiduciary Rule Explained

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    by Tom Allen and Mark Hebner — Wednesday, August 9, 2017

    One of the hottest topics in the financial services industry over the last two years has been the Department of Labor’s “Fiduciary Rule” as it applies to retirement assets. There have been many debates in the U.S. Congress and practitioners alike about the ...Read More

  • Tom Allen and Mark Hebner

    Baron Funds: A Deeper Look at the Performance

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    by Tom Allen and Mark Hebner — Tuesday, August 1, 2017

    Ronald Baron is widely known as one of the most successful investors in the U.S. Getting his start in the brokerage industry, Mr. Baron focused on the smaller, less desirable companies that didn’t seem necessarily attractive to most money managers. Finding success early on ...Read More

  • Tom Allen and Mark Hebner

    The 2nd Quarter of 2017 in Review

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    by Tom Allen and Mark Hebner — Friday, July 21, 2017

    Markets continued their climb during the 2nd Quarter of 2017 with most of the gains coming from outside of the United States. In the U.S., home sales reached highest levels since its peak before the 2008 Financial Crisis, job openings hit hew highs, the unemployment level fell ...Read More

  • Tom Allen and Mark Hebner

    The Academic Advantage

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    by Tom Allen and Mark Hebner — Tuesday, July 18, 2017

    The financial services industry has evolved over the last six decades. What started as essentially a broker or salesman role for getting people access to publicly traded securities has transformed into an academic discipline. We have documented this evolution from its roots with ...Read More

  • Tom Allen and Mark Hebner

    Bridgeway Capital Management: A Deeper Look at The Performance

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    by Tom Allen and Mark Hebner — Wednesday, July 5, 2017

    Multi-factor investing is slowly becoming a more common investment strategy among professional investment management firms. These firms, more informally known as “quants,” use statistical models to understand the common factors that drive performance in markets ...Read More

  • Tom Allen and Mark Hebner

    How Accurate Are JP Morgan's Capital Market Assumptions?

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    by Tom Allen and Mark Hebner — Friday, June 16, 2017

    JP Morgan publishes their annual “Long-Term Capital Market Assumptions” report every year with the hopes of providing professionals guidance in terms of what we should expect from markets over the next 10 to 15 years. On its face, being able to accurately forecast ...Read More

  • Tom Allen and Mark Hebner

    Stock Picking Fails in All Types of Markets

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    by Tom Allen and Mark Hebner — Tuesday, June 6, 2017

    A very common sales pitch amongst the active management community is their ability to provide “downside protection” for investors in falling markets. Here is an example from MFS Investment Management and our appropriate response. Given that most investors remember ...Read More

  • Tom Allen and Mark Hebner

    Dimensions of Expected Return: Patience is a Virtue – 2017 Update

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    by Tom Allen and Mark Hebner — Monday, May 29, 2017

    Giving investment advice should always aim to meet investors at their level of understanding. We do not expect everyone to have a PhD in Economics, so it is important to focus on big ideas that are the most crucial to understand. This can include ideas such as diversification, ...Read More

  • Tom Allen and Mark Hebner

    Legg Mason: A Deeper Look at the Performance

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    by Tom Allen and Mark Hebner — Wednesday, May 24, 2017

    Legg Mason, Inc. has been a powerhouse in the world of asset management for over a century. Founded in Baltimore, Maryland in 1899, Legg Mason is a publicly traded company (NYSE: LM) manages $710 billion in assets across six continents and employs over 3,400 professionals across ...Read More

  • Tom Allen and Mark Hebner

    The Five Qualifications of a Risk Premium - 2017 Update

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    by Tom Allen and Mark Hebner — Friday, May 19, 2017

    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 premium, imagine that the only available investment is Treasury Bills, widely ...Read More

  • Tom Allen and Mark Hebner

    Non-Fiduciaries Behaving Badly

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    by Tom Allen and Mark Hebner — Tuesday, May 16, 2017

    It should go without saying that doing business should always involve doing the very best for the person on the other side of the handshake. Unfortunately, this is not a requirement from a legal standpoint. The concept of caveat emptor, or “buyer beware” pervades ...Read More

  • Tom Allen and Mark Hebner

    DALBAR 2016 QAIB: Investors are Still Their Own Worst Enemy

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    by Tom Allen and Mark Hebner — Thursday, May 11, 2017

    DALBAR 2016 QAIB: Investors are Still Their Own Worst Enemy   Tom Allen & Mark Hebner   For 23 years, DALBAR has been publishing their annual Quantitative Analysis of Investor Behavior study that examines investor performance in mutual funds. Their goal is to shed ...Read More

  • Tom Allen and Mark Hebner

    Does Dollar Cost Averaging Really Work?

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    by Tom Allen and Mark Hebner — Monday, May 8, 2017

    Dollar cost averaging is the process of investing a lump-sum of money over a predetermined period of time. For example, let’s say you have $120,000 to invest. You can either invest the entire $120,000 or spread it out over a year - investing $10,000 every month. Here is ...Read More

  • Tom Allen and Mark Hebner

    Cambria Funds: A Deeper Look at the Performance

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    by Tom Allen and Mark Hebner — Tuesday, May 2, 2017

    The explosion in ETFs over the past decade has been substantial. Marrying the ideas of fund management with the ability to trade throughout the day, ETFs have become one of the most popular vehicles utilized by investors. In fact, according to the 2017 Fact Book from the ...Read More

  • Tom Allen and Mark Hebner

    2017 Q1 Market Review

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    by Tom Allen and Mark Hebner — Thursday, April 27, 2017

    2017 started off on a positive note for global investors. With international and emerging markets leading the way, most global indices on are track for another great year. In the U.S., jobless claims fell to their lowest point since March of 1973, housing starts climbed to their ...Read More

  • The Importance of Global Diversification

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    by Tom Allen and Mark Hebner — Tuesday, April 25, 2017

    Investing, in a nutshell, is really about dealing with risk and uncertainty.  While most of us like to focus on return aspect of investing, it is important to remember that return is only one side of the “investment coin.” Risk and uncertainty is on the other ...Read More

  • Tom Allen and Mark Hebner

    SPIVA: Active vs. Passive: 2016 Standard & Poor's Update [VIDEO]

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    by Tom Allen and Mark Hebner — Friday, April 21, 2017

    “Given that active managers’ performance can vary based on market cycles, the newly available 15-year data tells a more stable narrative. Over the 15-year period ending Dec. 2016, 92.15% of large-cap, 95.4% of mid-cap, and 93.21% of small-cap managers trailed their ...Read More

  • iShares vs. Dimensional: Through a Statistical Lens

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    by Tom Allen and Mark Hebner — Tuesday, April 18, 2017

    In Step 11 of the IFA 12-Step Recovery Program for Active Managers we talk about the implementation of our 100 IFA Index Portfolios. As strong proponents of a passive investment strategy, we have options in terms of what strategies we would like to utilize to build our globally ...Read More

  • Are There Potential Downfalls to Passive Investing?

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    by Tom Allen and Mark Hebner — Monday, April 17, 2017

    A recent article from the LA Times highlighted the recent trend of small investors putting more of their retirement savings into passive index funds. Citing multiple statistics from the Investment Company Institute, the rise of passive investing is starting to sweep the nation. ...Read More

  • Tom Allen and Mark Hebner

    AQR: A Deeper Look at the Performance

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    by Tom Allen and Mark Hebner — Friday, April 14, 2017

    Applied Quantitative Research (AQR) was founded in 1998 by Clifford Asness, David Kabiller, Robert Krial, and John Liew. Similar to Dimensional Fund Advisors, AQRs roots stem back to the University of Chicago where Asness, Liew, and Krial originally met when they were doctoral ...Read More

  • Understanding the Limitations of Our Own Faculties

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    by Tom Allen and Mark Hebner — Thursday, March 30, 2017

    “We're blind to our blindness. We have very little idea of how little we know. We're not designed to know how little we know.”– Daniel KahnemanThe Intelligent Investor   Working in the financial services industry has been an interesting adventure. As an ...Read More

  • Separation Between Economics and Markets: An Important Distinction

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    by Tom Allen and Mark Hebner — Tuesday, March 28, 2017

    It should be quite obvious to anyone that economics have an effect on markets. Predictions about employment, GDP growth, inflation, fiscal and monetary policy, trade balance, all have an effect on global enterprise and therefore have an effect on markets. What may not seem as ...Read More

  • Luck vs. Skill Across U.S. Equity Asset Classes

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    by Tom Allen and Mark Hebner — Wednesday, March 15, 2017

    When it comes to analyzing active management performance, it is important to understand the role that luck can play over various time horizons. Given the randomness of markets around the world, there is always a subset of managers who will outperform a given benchmark by chance. ...Read More

  • Tom Allen and Mark Hebner

    The Random Walker®, Visualizing How Markets Work

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    by Tom Allen and Mark Hebner — Wednesday, March 8, 2017

    Since the firm’s founding in 1999, investor education has been one of the cornerstones of our business model. Understanding the link between investment knowledge and risk capacity, our commitment to providing empirical insight to how financial markets work makes our ...Read More

  • Buffett's $1 Million Bet and Why You Should be an Indexer

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    by Tom Allen and Mark Hebner — Monday, March 6, 2017

    Back in 2007, Warren Buffett made a $1 Million bet with Ted Seides from Protégé Partners that a simple index fund will outperform hedge funds over the subsequent 10-year period. We have covered the story of this wager over time here and here. Armed with the ...Read More

  • A Belief in the Law of Small Numbers & The Gambler's Fallacy

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    by Tom Allen and Mark Hebner — Wednesday, March 1, 2017

    We often remind our readers that when dealing with random variables, like returns in the market, it is crucial that you are able to speak the language of statistics, which we call Riskese. In the world of random variables, there is no “black” or ...Read More

  • Tom Allen and Mark Hebner

    The Academic Advantage: The Evidence and Research Behind IFA's Advice

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    by Tom Allen and Mark Hebner — Friday, February 24, 2017

    We take an academic approach to investing at Index Fund Advisors, Inc. We utilize an evidence-based strategy that relies on objective, peer-reviewed research that has been published in academic financial and economic journals. Using this research, we have created portfolios with ...Read More

  • 2017 Contribution Limits

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    by Tom Allen and Mark Hebner — Thursday, February 23, 2017

    The beginning of the year is a great time to remind investors of the contribution limits for various savings vehicles in order for them to maximize their tax-preferential savings and avoiding, what can be, costly penalties. Contribution limits for 2017 for various accounts are ...Read More

  • Saving for College: Is the 529 Plan Optimal?

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    by Tom Allen and Mark Hebner — Friday, January 13, 2017

    Over the holiday weekend, I was having a discussion with a family member about saving for college given the recent birth of their daughter. This particular family member was looking into a 529 plan, but was concerned about some of the restrictions involved with having a 529. One ...Read More

  • Markets Are at New Highs: Is a Contraction on the Horizon?

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    by Tom Allen and Mark Hebner — Wednesday, January 11, 2017

    After coming off of a performing 2016 and with certain indices, like the Dow Jones Industrial Average, at or near all-time highs, many investors may be wondering if a market contraction is on the horizon. Unlike many of the professional news pundits who use their ...Read More

  • Why Discipline is So Important for Investors

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    by Tom Allen and Mark Hebner — Tuesday, January 10, 2017

    As we come to the end of the year it is important to reflect on some of the lessons learned from 2016. One of the biggest that comes to mind is the importance of discipline when it comes to investing, especially if you are trying to target specific risk ...Read More

  • Tom Allen and Mark Hebner

    Alliance Bernstein: A Deeper Look at the Performance

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    by Tom Allen and Mark Hebner — Thursday, January 5, 2017

    New York based money manager, Alliance Bernstein, has built a reputation of being one of the leading investment experts. They currently manage $490 Billion in assets, have 47 locations across 21 different countries, have close to 3,500 employees, and is currently traded on the ...Read More

  • Hedge Funds and Fraud: Way to Break the Stereotype

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    by Tom Allen and Mark Hebner — Thursday, December 29, 2016

    Hedge funds have received a pretty bad wrap since the last financial crisis. Some of the big stories that involved illegal behavior on behalf of hedge funds include Dreier LLP, Weavering Capital, Capitol Investments USA, Westgate Capital Management, Petters Group Worldwide, ...Read More

  • Retirement Funds: The "Off Limits" Money

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    by Tom Allen and Mark Hebner — Wednesday, December 28, 2016

    Saving for retirement, let alone saving enough for a retirement, is a difficult endeavor for most investors. With the majority of baby boomers being underfunded for retirement, the overall conclusion that investors having enough knowledge, resources, and will power to prepare ...Read More

  • The Hidden Weaknesses of Index Funds – From the Wall Street Journal

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    by Tom Allen and Mark Hebner — Tuesday, December 20, 2016

    The Wall Street Journal recently published a series of articles under the title “The Passivists.” Highlighting the merits of a passive investment approach, authors tackle topics such as the fruitless endeavor of trying to pick winning stocks to the “Do Nothing ...Read More

  • Tom Allen and Mark Hebner

    Putnam Investments: A Deeper Look at the Performance

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    by Tom Allen and Mark Hebner — Thursday, December 8, 2016

    Boston based money manager, Putnam Investments, has fallen on some hard times. As reported in the Boston Globe article, on Tuesday the company announced that it is going to cut 115 jobs or about 8% of its workforce given the continued outflow of assets from their firm. Currently ...Read More

  • Uselessness of Market Prediction Using Simple Logic

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    by Tom Allen and Mark Hebner — Wednesday, December 7, 2016

    “You make more money selling advice than following it. It’s one of those things we count on in the magazine business—along with the short term memory of our readers.” – Steve Forbes, publisher of Forbes Magazine It is officially that time of the ...Read More

  • 10 Reasons Investors Should Switch to Passive From Active

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    by Tom Allen and Mark Hebner — Wednesday, November 30, 2016

    While we believe there are many reasons why investors should look into adopting a passive investment strategy that incorporates buying, holding, and rebalancing a globally diversified portfolio of index funds, here are ten.  1. Markets Are Random: Markets are moved by news ...Read More

  • Targeting Premiums & Diversification

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    by Tom Allen and Mark Hebner — Tuesday, November 29, 2016

    Diversification provides many benefits for investors. Not only can we increase expected returns for a given level of risk, but we can also increase the reliability of capturing premiums or “dimensions” of expected return. In other words, once we decide that we want ...Read More

  • 2016 Year-End Fund Distributions & Portfolio Management

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    by Tom Allen and Mark Hebner — Monday, November 21, 2016

    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