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John Spence

Optimized Sampling in Vanguard's Total Stock Market Index Fund

by John Spence
Thursday, April 18, 2002

Recently we discussed why optimized sampling is critical to the managers of the iShares MSCI EAFE, an exchange-traded fund that covers a broad international index. ...Read More

Article Library

  • 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

  • The Dimensions of Stock Returns: 2002 Update

    by Truman Clark — Monday, April 1, 2002

    Based on the limited amount of data available, size and value effects also appear in emerging markets. The IFC Investables Total Return Index represents a portfolio of tradable stocks in emerging markets countries that non-resident investors are permitted ...Read More

  • Morningstar Broadens Style Box Methodology

    by Staff — Tuesday, March 26, 2002

    Morningstar, the Chicago-headquartered fund tracker, said it is updating the methodology it uses to pigeonhole mutual funds in its popular style boxes. Like passive index funds, style boxes are a tool long favored by institutional investors that have gone ...Read More

  • John Spence

    Clearing Up an ETF Liquidity Myth

    by John Spence — Wednesday, March 20, 2002

    We thought it was time to put a common misconception on exchange-traded fund liquidity to rest. Some investors appear to believe that the liquidity of an ETF is dependent on the fund's average trading volume, or the number of shares traded per day. ...Read More

  • What Makes A Good Mutual Fund?

    by Frank Armstrong — Monday, March 18, 2002

    As you build your portfolio, once you have decided on your asset allocation between stocks and bonds, and then picked your investment categories within the equity markets, it's time to select the mutual fund for each category. With over 7,000 domestic ...Read More

  • Big Board to Trade ETFs and HOLDRs Under UTP

    by Staff — Wednesday, March 13, 2002

    The New York Stock Exchange said it will soon begin trading 17 HOLDRs and 10 exchange-traded funds on the basis of unlisted trading privileges (UTP). All 27 of these funds are listed on the American Stock Exchange, and the move represents the second time ...Read More

  • Larry Swedroe

    Does Indexing Affect Stock Prices?

    by Larry Swedroe — Tuesday, March 12, 2002

    Index mutual funds have become the villains of an investment soap opera. Active managers have been blaming their underperformance on S&P 500 Index funds. The theory goes like this: money pours into the index funds because of the dissatisfaction with the ...Read More

  • John Spence

    Small Investors Frustrated by AMEX ETF Trading Glitch

    by John Spence — Tuesday, March 12, 2002

    Some individual investors are reporting difficulties purchasing small odd lots of exchange-traded fund shares using limit orders on the American Stock Exchange. Odd-lot limits refer to priced orders for less than the unit of a trade (typically less than ...Read More

  • Ten-Year Risk and Return of Several Popular Indexes

    by Staff — Thursday, March 7, 2002

    Asset allocation is certainly no simple task, but it's a little easier for passive investors as far as choosing funds. The reason is that indexers aren't concerned with finding the best manager in an asset class - they simply invest in the index fund or ...Read More

  • John Spence

    Ten-Year Risk and Return of Equity Asset Classes by Index

    by John Spence — Tuesday, March 5, 2002

    Most of the experts will tell you that a diversified equity portfolio is comprised of funds from the various asset classes, which are separated in terms of size and style. The idea is to build a broad base of funds that will hold up over the long haul and ...Read More

  • Stocks, Bonds and REITs

    by Daniel Fisher — Monday, March 4, 2002

    Investors have been considering real estate as a useful portfolio component for quite a while. Recently I saw the following quote in Roger Gibson's book, Asset Allocation: Balancing Financial Risk: "Let every man divide his money into three parts, and ...Read More

  • April Wrap-Up

    by Staff — Saturday, March 2, 2002

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

  • February Major Index Returns

    by Staff — Friday, March 1, 2002

    The Dow Jones Industrial Average was in the black for the month of February. Internationally, the Dow Jones indexes that cover world and European markets were down, while Asia closed up in ...Read More

  • John Spence

    Back to Boot Camp: Ben Graham's Take on Mutual Funds

    by John Spence — Thursday, February 28, 2002

    So we've got the whole Enron mess clogging up the headlines. John Bogle says things are so bad that the mutual fund industry, which controls a majority of stock in America's corporations, must break its traditional silence and actively speak out on ...Read More

  • FTSE and HSI Team Up to Launch Asian Equity Indexes

    by Staff — Wednesday, February 27, 2002

    Index providers FTSE and Hang Seng Indexes (HSI) International are getting together to launch a broad index that tracks the Asian economy (minus Japan), as well as sector indexes that cover the area. The new benchmarks will go live ...Read More

  • John Spence

    Morningstar Study Reinforces the Importance of Fund Costs

    by John Spence — Wednesday, February 27, 2002

    Chicago fund-tracker Morningstar wrapped up a study that examines the importance of fund costs on an investor's bottom line. Although the study looked only at actively managed domestic equity funds, the results should provide further encouragement to ...Read More

  • State Street and Unico to Introduce ETFs in Germany

    by Staff — Monday, February 25, 2002

    In a nod to the growing popularity of exchange-traded funds in Europe, Frankfurt-based Unico Asset Management announced that Boston-headquartered indexing behemoth State Street Global Advisors will manage and service seven new Unico i-tracker ETFs. ...Read More

  • Websites Roll Out More Snazzy Tools

    by Staff — Friday, February 22, 2002

    With good reason, all the talking heads are buzzing about asset allocation and diversification these days, and more Internet tools geared to do-it-yourself investors are cropping up. Three new gizmos of interest made their debut today, so let's take a ...Read More

  • John Spence

    Bogle Calls for Federation of Long-Term Investors

    by John Spence — Thursday, February 21, 2002

    Like Woodrow Wilson laying out his vision of a League of Nations after World War I, Vanguard founder John C. Bogle has called for a "Federation of Long-Term Investors" in the wake of the late 1990s speculative bubble, Enron, and a crisis in American ...Read More

  • HOLDRs Creation and Redemption Fees Temporarily Reduced

    by Staff — Wednesday, February 20, 2002

    The American Stock Exchange today sent out a notice that the Bank of New York has instituted a new fee structure for the issuance and cancellation of all HOLDRs. Bank of NY is temporarily waiving all of the issuance fees for HOLDRs, while the cancellation ...Read More

  • News Roundup

    by Staff — Tuesday, February 19, 2002

    The Vanguard Group today launched the Single 5 fixed annuity, which will be underwritten by Jefferson Pilot LifeAmerica Insurance Company. The new annuity offers a guaranteed fixed rate of return over the first five years and annual fixed interest rates ...Read More

  • KLD and Nasdaq Launch New Socially Responsible Index

    by Staff — Wednesday, February 13, 2002

    Think Nasdaq "cubes" for investors with a conscience. Boston-based KLD Research & Analytics and the Nasdaq stock market introduced a new socially responsible index of companies trading on the tech-heavy exchange that lists over 4,100 securities. The new ...Read More

  • Larry Swedroe

    Explaining The Value Premium

    by Larry Swedroe — Monday, February 11, 2002

    The historical evidence is that there is a very strong and persistent value premium. From 1964 to 2000 large value stocks outperformed large growth stocks 14.5 percent to 11.1 percent, and small value stocks outperformed small growth stocks 16.6 percent ...Read More

  • John Spence

    A Possible Antidote to Index Front-Runners: Secret Indexes

    by John Spence — Friday, February 8, 2002

    One of the biggest knocks against index funds is that they foster the so-called "index effect." This occurs when a stock is added to or removed from a well-known index like the S&P 500 or Russell 2000, and it is costly to investors. The company that is ...Read More

  • News Roundup

    by Staff — Monday, February 4, 2002

    A new study by Lipper estimates mutual fund shareholders coughed up $11 billion in shareholder-servicing expenses in 2001. According to Lipper, the average shareholder pays 2.8% of assets for services like online research tools, telephone representative ...Read More

  • News Roundup: Latest ETF Launches, New Vanguard Online Tools

    by Staff — Tuesday, January 29, 2002

    The iShares FTSE Eurotop 100 began trading yesterday on the London Stock Exchange. The exchange-traded fund, which has an expense ratio of 0.50%, holds the largest 100 companies and protects United Kingdom shareholders from damaging currency transaction ...Read More

  • Will McClatchy

    Active Fund Trading Costs Remain High

    by Will McClatchy — Tuesday, January 22, 2002

    Many individual investors believe that professionally managed funds have a trading cost advantage over them, but this is not the case. A recent study suggests that smaller volume traders have gained the most from recently shrinking commissions and smaller ...Read More

  • John Spence

    An ETF Cheat Sheet for Major Domestic Stock Categories

    by John Spence — Tuesday, January 15, 2002

    Exchange-traded funds (ETFs) make great tools for building a a reasonably diversified portfolio of U.S. stocks on the cheap, particularly for those making lump sum investments. However, with 102 domestic ETFs trading at last count, some investors may feel ...Read More

  • John Spence

    SEC Reviewing Actively Managed ETFs

    by John Spence — Thursday, January 10, 2002

    Not one of the currently 102 exchange-traded funds (ETFs) listed in the United States holding over $70 billion of assets in their coffers is actively traded. All are linked to equity benchmarks from the popular index providers such as Dow Jones, Russell, ...Read More

  • Vanguard Extended Market ETF Launches

    by Staff — Friday, January 4, 2002

    Vanguard Extended Market VIPERs, the exchange-traded fund to track the Wilshire 4500 Completion Index, will begin trading on January 4, 2002, on the American Stock Exchange under the symbol VXF. Vanguard Extended Market VIPERs (for Vanguard Index ...Read More

  • Mind Your Q's

    by Max Issacman — Friday, January 4, 2002

    By far the most popular exchange traded fund (ETF) is the one that tracks the Nasdaq-100 Index, symbol QQQ. It has been this way since the Qs made their first appearance on March 10, 1999. On that day alone the assets grew from an asset base of about $15 ...Read More