Articles (147)

1,085,670 views
Article Library

  • Mark Hebner

    Dimensional Fund Advisors: A Deeper Look At The Performance

    58,340
    by Mark Hebner and Murray Coleman — Updated: Wednesday, December 4, 2019

    As many of our readers know, we don’t think too highly of the active mutual fund industry. Not because we have a personal vendetta against them, but because their pursuit of attempting to outperform the market using other investors’ money has only enriched themselves ...Read More

  • Mark Hebner and Murray Coleman

    Selecting Investments Part 1

    57,403
    by Mark Hebner and Murray Coleman — Updated: Wednesday, July 24, 2019

    As a fiduciary for its clients, IFA only receives compensation from its clients and is therefore unbiased in its choice of ...Read More

  • Mark Hebner

    Calculations for t-Statistics

    54,475
    by Mark Hebner — Updated: Wednesday, May 22, 2019

    In calculating the t-stat, the first step is to determine the excess returns the manager earned above an appropriate ...Read More

  • Brad Steiman

    What's the Significance?

    52,938
    by Brad Steiman — Updated: Thursday, May 3, 2018

    Caution: Technical Discussion to Follow—READ AT YOUR OWN RISK. As the old saying goes, there are three kinds of lies: lies, damned lies, and statistics. It is true data can be tortured with statistical tools that will make it confess to almost anything. On the other hand, ...Read More

  • Rex Sinquefield

    Active vs Passive Management

    26,510
    by Murray Coleman — Updated: Tuesday, June 25, 2019

    Active management is the art of stock picking and market timing. Passive management refers to a buy-and-hold approach to money management. It can be applied to any asset class: big stocks, small stocks, value or growth, foreign or domestic can all be accessed by passive ...Read More

  • Mark Hebner

    Standard Deviation

    26,473
    by Mark Hebner and Murray Coleman — Updated: Monday, January 13, 2020

    In the field of finance, standard deviation represents the risk associated with a security or the risk of a portfolio of ...Read More

  • Mark Hebner and IFA Contributors

    Profitability and a Four-Factor Model

    24,221
    by Mark Hebner and IFA Contributors — Updated: Tuesday, May 21, 2019

    When constructing or evaluating a domestic equity portfolio, Index Fund Advisors has traditionally utilized the three-factor asset pricing model that Professors Eugene Fama and Ken French introduced1 in 1993. This model states that the expected return of a broadly diversified ...Read More

  • Mark Hebner

    Asset Location

    21,126
    by Mark Hebner — Updated: Thursday, August 15, 2019

    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 often helpful to construct a single portfolio consisting of multiple ...Read More

  • Mark Hebner and IFA Contributors

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

    20,690
    by Mark Hebner and Murray Coleman — Updated: Monday, June 3, 2019

    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. If your reaction was to place a large bet on ...Read More

  • Mark Hebner and IFA Contributors

    The Funded Ratio: An Actuarial Approach to Retirement Spending

    19,819
    by Mark Hebner and IFA Contributors — Updated: Wednesday, June 26, 2019

    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 their clients are near or in ...Read More

  • Mark Hebner

    Cash Withdrawal Considerations

    17,342
    by Mark Hebner — Updated: Thursday, July 18, 2019

    IFA is often in the position of accommodating regular cash withdrawal by its clients. The question is how to best generate cash for ...Read More

  • Mark Hebner

    Advisor Risk - How Would You Rate Your Advisor's Risk?

    17,217
    by Mark Hebner — Updated: Friday, November 1, 2019

    When it comes to investing, we can identify many risks investors assume, either knowingly or not. At Index Fund Advisors, we see it as our core mission to get investors to take the risks that are worth taking (e.g. market, size, value, term and default) and avoid the ones that ...Read More

  • Mark Hebner and Murray Coleman

    Eugene Fama: One of A Kind

    16,925
    by Mark Hebner and Murray Coleman — Updated: Thursday, December 19, 2019

    Academics are a hallmark of the investment strategy that we recommend to our clients. While there are plenty of sales pitches professing some sort of new or “hot” idea on how to get rich quick, we rely on peer-reviewed academic research to guide the decisions that we ...Read More

  • Mark Hebner

    Rebalancing Portfolios

    16,370
    by Mark Hebner and Murray Coleman — Updated: Tuesday, August 20, 2019

    It is important for investors to rebalance their portfolio to achieve risk control and maintain long-term investing ...Read More

  • Brad Steiman

    Paradox of Skill

    16,000
    by Brad Steiman — Updated: Tuesday, July 9, 2019

    Manager selection is a process that requires analyzing noisy performance data, so it should lean heavily on the notion of statistical ...Read More

  • Murray Coleman

    Invesco: A Deeper Look At the Performance

    15,867
    by Murray Coleman — Updated: Monday, December 23, 2019

    To many investors, Atlanta-based Invesco Ltd. is an investment management conglomerate with a history of acquisitions and multi-asset platforms that spans the globe. With more than $1.18 trillion in assets under management, it's involved in everything from mutual ...Read More

  • Ian Liew

    SBBI: The Almanac of Returns Data

    15,691
    by Ian Liew and IFA Contributors — Updated: Friday, July 19, 2019

    Stocks, Bonds, Bills, and Inflation (SBBI) is often characterized as the Almanac of returns data. This magisterial work originally produced by Roger Ibbotson and Rex Sinquefield is considered the go to place when information is needed on the expected returns and risks of a ...Read More

  • Mark Hebner and IFA Contributors

    The Never-Ending Pursuit of Manager Alpha – Updated

    14,061
    by Mark Hebner and Murray Coleman — Updated: Tuesday, August 20, 2019

    As we have pointed out on many occasions, both stock picking and hiring an active manager to pick stocks on your behalf are mug’s games. While some investors diligently study individual stocks and other investors handsomely pay active managers to deliver alpha (an ...Read More

  • Murray Coleman

    A Vanishing Value Premium?

    13,106
    by Murray Coleman — Updated: Tuesday, July 31, 2018

    New research by DFA confronts head-on whether the value premium is fading. Analysts crunch 90 years worth of data to gain a better ...Read More

  • Mark Hebner and IFA Contributors

    Fairholme and Sequoia—No Great Performance Here - 2017 Update

    11,965
    by Mark Hebner and IFA Contributors — Updated: Tuesday, January 16, 2018

    Recently, we received a question from a client that we will paraphrase as follows: “While I know that the returns I have gotten from index funds have beaten the majority of active managers, would I not have been better off in funds like the Fairholme Fund (FAIRX) or the ...Read More

  • Mark Hebner and IFA Contributors

    Advisor Alpha: The View from Vanguard

    10,885
    by Mark Hebner and Murray Coleman — Updated: Thursday, August 15, 2019

    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 behalf. Nevertheless, by engaging in a few prudent practices such as ...Read More

  • Tom Allen and Mark Hebner

    Prudential Financial: A Deeper Look at the Performance

    8,105
    by Mark Hebner and IFA Contributors — Updated: Tuesday, January 30, 2018

    Prudential Financial is a Fortune 500 company based out of Newark, New Jersey. Traded on the New York Stock Exchange (NYSE: PRU), Prudential Financial employs over 49,000 people across 40 countries, offers insurance products, wealth management, fund management, and retirement ...Read More

  • Murray Coleman

    Not All Fiduciaries are the Same

    7,101
    by Murray Coleman — Updated: Tuesday, August 7, 2018

    Advisors offering fiduciary services to 401(k) and 403(b) plans aren't all the same. In fact, they come in two distinct ...Read More

  • Tom Allen and Mark Hebner

    Great West: A Deeper Look at the Performance

    6,630
    by Mark Hebner and IFA Contributors — Thursday, March 22, 2018

    Great-West Financial is a subsidiary of Great-West Life, Co. (TSX: GWO), which itself is a subsidiary of Power Financial Corp. (TSX: POW) based out of Montreal, Quebec, Canada. Great-West Financial is the American market for Great-West Life, Co.’s, selling its investment, ...Read More

  • Mark Hebner

    Time for the Fire Drill

    6,070
    by Mark Hebner — Updated: Monday, December 4, 2017

    Most of us remember the days at school when we had our routine fire drill. The fire alarms around the school would ring, we would all calmly and collectedly stand up, form a line, and walk out of the school to a safe place. While I am sure many ...Read More

  • Mark Hebner and Murray Coleman

    Dimensions of Expected Return: Patience is a Virtue – 2019 Update

    5,090
    by Mark Hebner and Murray Coleman — Updated: Monday, July 8, 2019

    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

  • Dimensional Fund Advisors

    To Bit or Not to Bit: What Should Investors Make of Bitcoin Mania?

    4,089
    by Dimensional Fund Advisors — Friday, December 15, 2017

    Bitcoin and other cryptocurrencies are receiving intense media coverage, prompting many investors to wonder whether these new types of electronic money deserve a place in their portfolios. Cryptocurrencies such as bitcoin emerged only in the past decade. Unlike traditional ...Read More

  • Tom Allen and Mark Hebner

    Richard Thaler's Nobel Prize and Practical Implications for Investors

    3,873
    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

  • Murray Coleman

    Diary of a 'Reformed' Journalist

    3,623
    by Murray Coleman — Tuesday, April 3, 2018

    I was trained as a journalist to approach any type of speculative claim with a high degree of skepticism. But it took years of sifting through a wealth of academic research and market evidence for me to finally make a career change. In all honesty, it's just become too apparent ...Read More

  • murray@ifa.com

    Investment Management's Dirty Little Secret

    3,616
    by Murray Coleman — Thursday, April 26, 2018

    The financial advice industry has a dark secret, one that costs global investors dearly every year. In a wide-ranging Q&A, IFA Founder Mark Hebner talks about these and other money management potholes that investors should avoid and how to do ...Read More

  • Robin Powell

    Francis Galton and the Iron Rule of Markets

    3,606
    by Robin Powell — Wednesday, January 31, 2018

    “Reversion to the mean,” Jack Bogle once said, “is the iron rule of financial markets.” And if you understand nothing else about how investing works, grasping this one simple concept will give you a better chance of succeeding at it than supposedly ...Read More

  • Murray Coleman and Mark Hebner

    False Diversification: Liquid Alts

    3,487
    by Murray Coleman and Mark Hebner — Monday, August 13, 2018

    Trying to take advantage of the benefits of diversification, purveyors of liquid alts are going wild. But don't believe all of the ...Read More