Articles (106)


  • The Law of Large Numbers: Bill Miller's Fall From Grace

    by Tom Allen and Mark Hebner — Friday, September 2, 2016

    Bill Miller is widely considered one of the most successful investors of all time. At the helm of the Legg Mason Value Trust Fund (LMVTX) for over three decades, he earned the title of legendary by beating the ...Read More

  • The Small-Cap "Alpha" Myth: An Update!

    by Tom Allen and Mark Hebner — Wednesday, April 27, 2016

    There is a common misconception about “alpha” in the small-cap market within the United States. Many professionals believe that once we step out of the mega-cap world of companies like Google, ...Read More

  • The Short End of a Corrupt Giant

    by Tom Allen and Mark Hebner — Monday, December 28, 2015

    Most of us are aware of the story of David and Goliath from the Holy Bible. According to the Books of Samuel, Goliath was a Philistine warrior of tremendous strength and size who was defeated by a much ...Read More

  • The MFS "Active Advantage"... Really?

    by Tom Allen and Mark Hebner — Wednesday, November 11, 2015

    MFS Investment Management made very well scripted and produced commercials highlighting some of the typical selling points active managers like to make when speaking to investors. Let's take a deeper ...Read More

  • Tom Allen and Mark Hebner

    Part 1: Fidelity Funds - A Deeper Look at the Performance [VIDEO]

    by Tom Allen and Mark Hebner — Wednesday, August 19, 2015

    It is not uncommon for us to receive questions from clients and prospects about a particular family of mutual funds. The financial media is always quick to highlight top performing managers (here is an example ...Read More

  • Maryland - Ready For an Investment Change

    by Tom Allen and Mark Hebner — Wednesday, July 15, 2015

    No this is not a political campaign slogan, but more of a realization. The Baltimore Sun recently published an article highlighting the recent popularity of passive investing and how some of the biggest ...Read More

  • Chasing Our Tails Through Past Performance

    by Tom Allen and Mark Hebner — Tuesday, May 12, 2015

    For those who have been investing for some time, you should be very familiar with the following statement: “past performance is no guarantee of future results.” This SEC mandated disclaimer when ...Read More

  • Did Bloomberg Find Another Bill Miller?

    by Mark Hebner and IFA Contributors — Tuesday, March 24, 2015

    You may recall that Bill Miller was the fund manager who enjoyed the unparalleled winning streak of beating the S&P 500 Index for fifteen consecutive years ending in 2005. Of course, investors who came ...Read More

  • Pension-Gate — More Good News from Pennsylvania

    by Mark Hebner and IFA Contributors — Tuesday, March 10, 2015

    A little more than a year ago, we reported on how the stewards of the pension fund for Montgomery County, Pennsylvania came to the wise decision of moving away from high-cost actively managed funds in favor of ...Read More

  • Pimco Continues to Bleed Cash

    by Mark Hebner and IFA Contributors — 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

  • Can Managers Pick Managers?

    by Mark Hebner and IFA Contributors — 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

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

    by Mark Hebner and IFA Contributors — 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

  • The Google Effect?

    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

  • A Second Look at the Indian Mutual Fund Landscape

    by Mark Hebner and IFA Contributors — 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

  • The Bond King Leaves PIMCO for Janus Capital

    by Mark Hebner and IFA Contributors — 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

  • Pension-Gate: Some Good News from CalPERS

    by Mark Hebner and IFA Contributors — Thursday, September 18, 2014

    According to this press release, the $300 billion California Public Employees’ Retirement System (CalPERS) will eliminate its hedge fund program which currently consists of $4 billion spread over 24 ...Read More

  • Help Wanted: Stock Pickers Need Not Apply

    by Mary Brunson, Vice President — Friday, September 5, 2014

    “The debate about whether you should hire an “active” fund manager who tries to beat the market by buying the best stocks and avoiding the worst — or a “passive” index fund ...Read More

  • A Textbook Case of Insider Trading

    by Mark Hebner and IFA Contributors — Thursday, September 4, 2014

    When we hear about someone being charged with insider trading, the first thought that usually comes to mind is that of company executives or hedge fund sharpies that illegally profited from their access to ...Read More

  • Vanguard Quantifies the Impact of Performance-Chasing

    by Mark Hebner and IFA Contributors — Monday, August 25, 2014

    For many years now, IFA has called attention to the dismal performance of individual investors. The chart below shows the results of the DALBAR study which details how the average individual fund investor has ...Read More

  • Pension-Gate: Some Good News and Bad News

    by Mark Hebner and IFA Contributors — Thursday, August 14, 2014

    The recent good news from the Wall Street Journal (summarized here) is that the California Public Employees’ Retirement System (CALPERS) is planning to drop the level of its hedge fund investments this ...Read More

  • State Pension Plans - A Deeper Look at Performance

    by Mark Hebner and IFA Contributors — Wednesday, August 6, 2014

    Index Fund Advisors expended a large amount of time and effort in putting together the data that reveals the failure of active management for state pension systems. As of now, there is no central repository of ...Read More

  • The NACUBO Study

    by Mark Hebner — Thursday, June 12, 2014

    You may think that college endowments, with all their access to academic knowledge and brainpower, would regularly hit home runs. You would be ...Read More

  • A Graphical View of the Mutual Fund Landscape

    by Mark Hebner and IFA Contributors — Wednesday, June 11, 2014

    Since IFA began operations in 1999, we have published articles detailing how incredibly stacked the odds are against successfully picking a manager who will beat his benchmark (i.e., deliver alpha). See here ...Read More

  • Fairholme and Sequoia—No Great Performance Here

    by Mark Hebner and IFA Contributors — Thursday, May 15, 2014

    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 ...Read More

  • Manager Picking is a Mug's Game

    by Mark Hebner and IFA Contributors — Friday, May 2, 2014

    The search for investment managers who will deliver alpha is an activity that accounts for billions of dollars that is spent by foundations, endowments, pension plans, and other institutional investors. To ...Read More

  • When Mythology Is Confused with Reality

    by Mark Hebner and IFA Contributors — 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

  • Morningstar Takes a Closer Look at Survivorship Bias

    by Mark Hebner and IFA Contributors — 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

  • Morningstar's Fund Managers of the Year

    by Mark Hebner and IFA Contributors — 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

  • 2013: Another Dismal Year for Hedge Funds

    by Mark Hebner and IFA Contributors — 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

  • The Myth of Fund Ratings

    by Anonymous — Monday, December 23, 2013

    At least 80% of actively managed funds underperform the S&P 500 in any 10 year period—and there are indexes that perform better than the S&P 500. If risk-adjusted returns are taken into account, funds lose out ...Read More

  • PIMCO: Just How Consistent is Consistent?

    by Mark Hebner and IFA Contributors — Wednesday, December 18, 2013

    In Bill Gross’s December 2013 Investment Outlook letter, he joined the ranks of Warren Buffett and Peter Lynch in giving a solid endorsement to indexing while reminiscing about his younger days when Jack ...Read More

  • Beating the Market—What's Luck Got to Do with It?

    by Mark Hebner and IFA Contributors — Tuesday, December 10, 2013

    The answer to that question is quite a bit actually, at least according to Nobel Laureate Eugene Fama1 and Ken French. Contrary to the protestations of Robert Olstein as featured in this New York Times ...Read More

  • The Persistent Myth of Active Funds in Bear Markets

    by Mark Hebner and IFA Contributors — Friday, November 22, 2013

    All too often, we hear the refrain that yes, index funds are great for bull markets, but when the next bear market rears its ugly head, you will want to be in active funds because the manager can anticipate ...Read More

  • Vanguard Debunks a Widespread Myth about the Market

    by Mark Hebner and IFA Contributors — Tuesday, November 19, 2013

    For at least the past two decades, we have been hearing about an approaching day of reckoning for the stock market prompted by retiring baby boomers selling their equities to fund their retirement needs. ...Read More

  • A Guilty Plea and a Record Fine for SAC Capital

    by Mark Hebner and IFA Contributors — Tuesday, November 5, 2013

    Three months ago, we wrote about the unprecedented indictment of SAC Capital, and a few months before that, we wrote about SAC’s record-setting $616 million settlement for insider trading. Today’s ...Read More

  • All the Way from India Comes a Voice of Reason

    by Mark Hebner and IFA Contributors — Friday, October 4, 2013

    At Index Fund Advisors, one of the things that we like to keep an eye on is the emergence of indexing in other countries. As the second most populous of the four “BRIC” countries (Brazil, Russia, ...Read More

  • Thinking About a Private Placement? Think Again! [VIDEO]

    by Mark Hebner and IFA Contributors — Wednesday, September 25, 2013

    So says the Financial Industry Regulatory Authority (FINRA) in a recent press release and investor alert. A private placement is an offering of a company’s securities that is not registered with the ...Read More

  • The Failure of Manager Pickers

    by Mark Hebner — Wednesday, August 7, 2013

    Like stock and time picking, manager picking is usually a worthless endeavor; however, there are still investors out there who believe they can select an all-star manager or financial guru who can beat the ...Read More