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John Spence

Vanguard Indexing Guru Examines Fund Performance in Bear Market

by John Spence
Wednesday, July 24, 2002

The financial media seems to love to take shots at indexing in bear markets, and now is obviously one of those times. The Wilshire 5000 index, the yardstick for the broad domestic stock market, is down a wrenching 16.60% for the year ending June 2002, ...Read More

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  • John Spence

    Vanguard to Introduce Three International ETFs

    by John Spence — Tuesday, July 23, 2002

    The Vanguard Group today filed an application with the SEC to introduce exchange-traded fund shares for three of its existing international index funds. Pending SEC approval, European Stock Index, Pacific Stock Index, and Emerging Markets Stock Index will ...Read More

  • Larry Swedroe

    There Is Trouble In 401(k) Land

    by Larry Swedroe — Tuesday, July 16, 2002

    The historical record provided by academic studies is very clear that the winning investment strategy is to invest in funds that are passively-managed index funds, exchange-traded funds (ETFs), and passive asset class funds. Unfortunately, a conflict of ...Read More

  • John Spence

    Russell Indexes Gain Market Share

    by John Spence — Wednesday, July 3, 2002

    Russell indexes are becoming more widely accepted by institutional investors, according to a recent study of over 3,6000 U.S. equity products listed in Nelson Information's Marketplace Web database. The 10 most commonly used U.S. equity benchmarks are ...Read More

  • Big Board Launches Four New Indexes

    by Staff — Thursday, June 27, 2002

    The New York Stock Exchange today launched four equity indexes that track the performance of NYSE-listed stocks from broad market sectors. ...Read More

  • Barclays to Launch Fixed-Income ETFs in July

    by Staff — Wednesday, June 26, 2002

    San Francisco-based Barclays Global Investors today announced that four iShares tied to bond indexes will begin trading on the American Stock Exchange on July 26. The fixed-income ETFs, the first to trade in the U.S., will be linked to the Lehman 1-3 Year ...Read More

  • Most Slumping Equity Indexes in Red for the Year

    by Staff — Friday, June 21, 2002

    After surging ahead earlier this week, most equity indexes fell sharply going into the weekend. It wasn't a great week for most equity fund investors, and a look at 1-year index returns shows pain has been the norm over the last 12 months. As a result, ...Read More

  • ETF Total Assets Top $90 Billion

    by Staff — Thursday, June 20, 2002

    The total assets of all exchange-traded funds that trade in the U.S. rose to $92.86 billion in May 2002, according to the Investment Company Institute, the mutual fund industry's trade group. Total ETF assets increased by $7 million in May, with domestic ...Read More

  • John Spence

    Sector ETFs are Relatively Cheap, but Still Carry Risks

    by John Spence — Monday, June 17, 2002

    In what seems like both a blessing and a curse for retail investors, exchange-traded funds offer the ability to invest in thin equity market slices cheaply relative to traditional sector mutual funds. According to Morningstar, the average sector mutual ...Read More

  • The Motley Fool

    Stockaholics Anonymous

    by The Motley Fool — Thursday, June 13, 2002

    The physical signs are impossible to conceal: sweating and increased palpitations at every market blip or earnings announcement; an uncontrollable twitch in your "trading finger"; that involuntary trance-like draw to the sound of Maria Bartiromo's voice; ...Read More

  • John Spence

    Index Spotlight: Dow Jones Style Index ETFs

    by John Spence — Tuesday, June 11, 2002

    Currently there are exchange-traded funds available that track style indexes from Russell, Standard & Poor's/Barra, and Dow Jones. At first glance these indexes seem similar, but as we've seen before subtle differences in index methodology can lead to ...Read More

  • The Case for International ETFs

    by J.D. Steinhilber — Wednesday, June 5, 2002

    A long-standing tenet of investing is that a diversified portfolio should include a meaningful foreign stock component. During the awesome bull market in U.S. stocks in the late 1990's, however, many investors and advisers began to challenge this premise. ...Read More

  • May Wrap-Up

    by Staff — Monday, June 3, 2002

    Here's how major equity indexes fared in May 2002, broken down by index ...Read More

  • John Spence

    How the ETF Arbitrage Pricing Mechanism Works

    by John Spence — Monday, June 3, 2002

    Research indicates that most buy-and-hold investors are primarily drawn to exchange-traded funds for their lower expense ratios and potential tax efficiency. Most passive investors are not interested in trading during the day, but the ability to do so ...Read More

  • John Spence

    Lipper Introduces 'Active' Indexes

    by John Spence — Thursday, May 30, 2002

    New York-based fund research firm Lipper last week launched several equity indexes based on actual stocks held by mutual funds from various categories. Lipper joins its competitor fund tracker Morningstar in launching equity indexes that could be the ...Read More

  • Larry Swedroe

    Active Small-Cap Managers Add Value: Myth or Reality?

    by Larry Swedroe — Thursday, May 30, 2002

    One of the more persistent claims from Wall Street is that the inefficiency of information in small-cap stocks allows active managers to exploit market mispricings and outperform passive benchmarks. It is important to note that part of this claim is true ...Read More

  • John Spence

    SEC Clears the Way for Fixed-Income ETFs

    by John Spence — Wednesday, May 29, 2002

    In an open meeting, the Securities & Exchange Commission today gave the initial go-ahead to Barclays Global Investors to launch domestic fixed-income exchange-traded funds. Barring a hearing on the matter, in 25 days the SEC will issue orders granting BGI ...Read More

  • Dunn's Law Revisited

    by Frank Armstrong — Thursday, May 23, 2002

    Occasionally even serious financial columns mention Dunn's Law as if it were an accepted economic maxim. It isn't, and it's dangerous to pretend that it might be. ...Read More

  • John Spence

    Rebalancing Reduces Portfolio Volatility

    by John Spence — Wednesday, May 22, 2002

    Buy low, sell high. It's perhaps the oldest and most familiar of investment axioms. However, investors who neglect to periodically rebalance and let their portfolios run off the leash may not end up living by this ...Read More

  • Feel the Rush of Trading ETFs

    by Richard Evans — Friday, May 17, 2002

    On May 14, when the markets shot up for the second day in a row, did you feel an urge to get in on the action? Yes, I know we all have our standard asset allocation related to our age and so forth. And we're supposed to just let it be. But that's like ...Read More

  • SEC Proposes Mutual Fund Ad Rules

    by Staff — Wednesday, May 15, 2002

    The Securities & Exchange Commission (SEC) is seeking comment on proposed rules designed to ensure mutual fund advertisements aren't misleading to investors. The Commission specifically cited fund ads that touted skyrocketing performance in 1999 and 2000 ...Read More

  • John Spence

    ETFs Defy Traditional Classifications

    by John Spence — Tuesday, May 14, 2002

    Due to their unique structure and operations, exchange-traded funds don't fit neatly into traditional fund classifications. Data providers and industry observers still haven't decided for sure how to pigeonhole ETFs. In particular, several methods can be ...Read More

  • John Spence

    ETF Tax Efficiency Part 2 - In Defense of Index Funds

    by John Spence — Thursday, May 9, 2002

    Yesterday we posted an article on exchange-traded fund (ETF) tax efficiency. We looked at how ETFs function and why proponents claim they will be more tax efficient than traditional index mutual funds over time. We also posted data from ETF researcher ...Read More

  • John Spence

    S&P to Launch Hedge Fund Index

    by John Spence — Wednesday, May 8, 2002

    There seems to be an index for just about anything these days, so why not a benchmark for hedge funds? Standard & Poor's said it is set to launch an index that seeks to tame this unique asset class. The new index will be made up of 40 funds broken into ...Read More

  • John Spence

    ETF Experts Look at Tax Efficiency

    by John Spence — Tuesday, May 7, 2002

    One of the most compelling reasons for investing in exchange-traded funds is their potential heightened tax efficiency relative to traditional index mutual funds. Although most ETFs have a relatively short amount of history behind them, some researchers ...Read More

  • John Spence

    Index Spotlight: Russell Style Indexes

    by John Spence — Monday, May 6, 2002

    Recently we looked at the performance disparity between two small-cap blend indexes: the S&P SmallCap 600 and the Russell 2000. We found that subtleties in index methodology can lead to different results in indexes designed to track similar market ...Read More

  • Capital Asset Pricing Model

    by Frank Armstrong — Wednesday, May 1, 2002

    If Bill Sharpe's first thesis had been accepted, the world of finance might look a lot different today. Fortunately, after the paper was rejected as so uninteresting that there "was absolutely no thesis there," Sharpe was introduced to Harry Markowitz. ...Read More

  • Index Spotlight: Fortune 500

    by Staff — Monday, April 29, 2002

    As passive investing continues to catch on with mainstream investors, understanding the differences between equity indexes is becoming critical for many. Benchmarks that are highly correlated and similar on the surface can oftentimes behave very ...Read More

  • Paul B. Farrell,

    New 12-Step Program for Indexers

    by Paul B. Farrell — Friday, April 26, 2002

    Last Updated: 12:10 AM ET Apr 26, 2002 12-step program for investing in index funds LOS ANGELES (CBS.MW) - I love surfing the web. You go looking for one thing, and you run across a new gem that's so good it makes you forget what you're looking for. Like the "12-Step ...Read More

  • Large Growth Editors' Picks

    by Staff — Wednesday, April 24, 2002's favorites funds and ETFs for the large growth category are as follows. Click on any fund name for more details, the funds are not listed in order of ...Read More

  • Small Growth Editors' Picks

    by Staff — Wednesday, April 24, 2002

    Loved by active managers and shunned by indexers, the small-cap growth sector nonetheless has a handful of excellent index fund ...Read More

  • Small-Cap Value Editors' Picks

    by Staff — Wednesday, April 24, 2002

    Many of the cleverest indexers favor heavy weighting of the small-cap value sector. Our favorites include the following. Click on any fund name for more details, the funds are not listed in order of ...Read More

  • Mid-Cap Value Editors' Picks

    by Staff — Wednesday, April 24, 2002

    Recommended mid-cap value funds mirror their mid-cap growth siblings. Click on any fund name for more details, the funds are not listed in order of ...Read More

  • Large Blend Editors' Picks

    by Staff — Wednesday, April 24, 2002

    For large blend, we suggest the following funds that offer both value and growth. Most are S&P 500 funds. Click on any fund name for more details, the funds are not listed in order of ...Read More

  • Epitaph for a Doomed Fund

    by Staff — Monday, April 22, 2002

    Indexers often talk about "seeding and weeding" of funds in the abstract, which does not always convey the reality of the wreckage created by these practices. Seeding is the frequent launch of new active funds in hopes that a few will shine, and weeding ...Read More

  • Dividends and ETFs

    by Staff — Friday, April 19, 2002

    The structure of an exchange-traded fund can influence its returns, especially when it comes to dividends that companies pass on to shareholders. For example, SPDR 500, by far the largest ETF, is a unit investment trust (UIT). This type of structure ...Read More

  • Select Sector SPDR Changes

    by Staff — Friday, April 19, 2002

    ETF investors should know that a big rebalancing is on the horizon for the Select Sector SPDRs. On June 24 the nine Select Sector SPDRs will rebalance to look more like the ten Global Industry Classification Standard (GICS) sector definitions. GICS is a ...Read More

  • Editors' Picks - US Total Market

    by Staff — Wednesday, April 17, 2002

    We believe it is self-evident that portfolios should start with the domestic total market fund for that portion of the portfolio that is intended to mirror, for the long-term, the total market on a capitalization-weighted basis. We discourage slicing and ...Read More

  • Large Value Editors' Picks

    by Staff — Wednesday, April 17, 2002 preferred large value funds are as follows. Click on any fund name for more details, the funds are not listed in order of ...Read More

  • Editors' Index Fund Picks, by Asset Class

    by Staff — Wednesday, April 17, 2002

    We at feel it is high time we begin to separate the wheat from the chaff. With some firms charging 4% loads and 1% annual fees on S&P 500 index funds, there is a penalty for not choosing ...Read More

  • Small-Cap Blend Editors' Picks

    by Staff — Wednesday, April 17, 2002

    Small-cap blend funds are a favorite way to diversify a portfolio heavy with S&P stocks. Some of our favorites are as follows. Click on any fund name for more details, the funds are not listed in order of ...Read More

  • Mid-Cap Blend Editors' Picks

    by Staff — Wednesday, April 17, 2002's preferred mid-cap blend funds are as follows. Click on any fund name for more details, the funds are not listed in order of ...Read More

  • No Entry or Exit Fees: Another advantage of ETFs

    by Richard Evans — Thursday, April 11, 2002

    Some critics of exchange-traded funds (ETFs) say you can get the same cost and tax advantages by using conventional index funds, especially at Vanguard. Long the king of index funds, Vanguard has about 24 of them, which they manage at extremely low cost. ...Read More

  • John Spence

    UBS Asset Management Licenses Morningstar Indexes

    by John Spence — Thursday, April 11, 2002

    Long known as a sideline mutual fund tracker and commentator, Morningstar is set to enter the industry as an active participant in the role of index licensor. UBS Global Asset Management said today that it will be the first fund company to license at ...Read More

  • New Generation Of Tax Managed Funds

    by Frank Armstrong — Monday, April 8, 2002

    A third generation of tax managed index funds adds dividend management to capital gains management, enhancing the already formidable tax advantages that passive funds offer to investors. These new funds take tax efficiency to a new ...Read More

  • John Spence

    Optimizing Indexed Portfolios

    by John Spence — Thursday, April 4, 2002

    In many cases, holding every stock in an index isn't cost effective. One reason is that some thinly traded securities, such as small-cap or international stocks, are illiquid and carry higher transaction costs and wider bid-ask spreads. Therefore, index ...Read More

  • John Spence

    A Chat with a Socially Responsible Fund Manager

    by John Spence — Thursday, April 4, 2002

    Steve Dillenburg is the lead manager of the Summit Total Social Impact (SATSX) fund, an offering that is truly unique in the socially responsible fund world. The TSI fund invests in all of the stocks in the S&P 500, but it weights the companies ...Read More

  • Another Look at ETF Premium/Discounts and Spreads

    by Staff — Wednesday, April 3, 2002

    As we noted in a previous article, the liquidity of an exchange-traded fund is not always best measured by the historical trading volume of the fund. A better gauge of an ETF's liquidity is the liquidity of the underlying stocks in the index. ...Read More

  • March Wrap-Up

    by Staff — Monday, April 1, 2002

    The S&P 500 inched slightly forward in the first quarter of 2002, while small-cap and value indexes moved ahead of the pack. On the other hand, most growth indexes across market capitalizations are in the red so far this ...Read More