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Supreme Court: Time Doesn't Heal All Wounds

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by Mark Hebner and IFA Contributors
Monday, October 13, 2014

We are quite pleased to learn about two recent court rulings on a topic that is very important to us, fiduciary protection in retirement plans. Both rulings rejected arguments that the plan sponsor defendants were protected from compensating plan participants for imprudent ...Read More

Archive

  • A Summary of the 2005 SEC Study of Pension Consultants

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    by Mark Hebner and IFA Contributors — Friday, October 10, 2014

    In 2005, the Securities and Exchange Commissions (SEC) published a study of investment consultants who are hired by pension plans to pick managers for them. The SEC conducted focused examinations of ...Read More

  • Do Investment Consultants Add Value?

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    by Mark Hebner and IFA Contributors — Thursday, October 9, 2014

    Large institutional investors such as foundations, endowments, and pension plans spend billions of dollars on investment consultants on whom they rely to pick active managers. Recently, three researchers (two ...Read More

  • A Second Look at the Indian Mutual Fund Landscape

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    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

  • Is Diversification Still Your Buddy?

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    by Mark Hebner and IFA Contributors — Monday, October 6, 2014

    The title above refers to a famous quote from Nobel laureate Merton Miller, who was a teacher to the Father of Modern Finance, Eugene Fama. It also refers to the fact that for the first three quarters of 2013, ...Read More

  • The Third Quarter of 2014 in Review

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    by Mark Hebner and IFA Contributors — Thursday, October 2, 2014

    In the third quarter of 2014, equities pulled back around the world, particularly for international developed markets. Portfolios tilted towards small cap and value companies performed worse than portfolios ...Read More

  • The Value of Following IFA's Advice

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    by Mark Hebner — Wednesday, October 1, 2014

    What is the value of staying invested in a globally-diversified risk-appropriate portfolio regardless of what happens in the financial markets? Admittedly, this is very difficult to quantify because there is ...Read More

  • Hedge Fund Shenanigans Uncovered by the SEC

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    by Mark Hebner and IFA Contributors — Tuesday, September 30, 2014

    While perusing the Wall Street Journal, we came across an article1 (“SEC Criticizes Hedge Funds”) that caught our attention. The Securities and Exchange Commission (SEC) recently completed ...Read More

  • The Bond King Leaves PIMCO for Janus Capital

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    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

  • Is Indexing the End of Capitalism? We Don't Think So!

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    by Mark Hebner and IFA Contributors — Thursday, September 25, 2014

    Political commentator Jonathan Russo wrote an interesting article on Huffingtonpost.com called “Indexing and the End of Capitalism.” Although it had a great start by noting the arrival of the ...Read More

  • Marlena Lee

    How Much Income Do You Need in Retirement?

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    by Marlena Lee — Wednesday, September 24, 2014

    The answer, of course, is different for every person. In the video, Marlena Lee of Dimensional Fund Advisors explains how someone who is close to retirement can arrive at a reasonable estimate of what they ...Read More

  • Frontier Markets—Tread Carefully Says FINRA

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    by Mark Hebner and IFA Contributors — Monday, September 22, 2014

    The frontier markets consist of developing countries that have not yet made it to or have dropped out of the category of emerging markets. Some examples would be Argentina, Lebanon, Nigeria, Slovenia, and ...Read More

  • Pension-Gate: Some Good News from CalPERS

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    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

  • The Curse of the Five-Star Rating

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    by Mark Hebner and IFA Contributors — Tuesday, September 16, 2014

    A recent Wall Street Journal article (“Mutual Funds’ Five-Star Curse”, 9/8/2014) should give pause to investors who only pick managers with the coveted five-star rating from Morningstar. As ...Read More

  • IFA's Ever-Expanding Hedge Fund Manager Hall of Shame

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    by Mark Hebner and IFA Contributors — Monday, September 15, 2014

    Last year, Index Fund Advisors inaugurated its Hedge Fund Manager Hall of Shame. Since then, quite a bit has happened with what Forbes called The Sleaziest Show on Earth. On September 8th, Mathew Martoma of ...Read More

  • Q&A with IFA: ETFs vs. Tax-Managed Funds

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    by Mark Hebner and IFA Contributors — Thursday, September 11, 2014

    Question: I have heard that exchange-traded funds (ETFs) are more tax-efficient (have lower tax costs) than index mutual funds. For a taxable account, should I prefer to hold ETFs? Answer: There is a widely ...Read More

  • Two More Hedge Funds Bite the Dust

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    by Mark Hebner and IFA Contributors — Tuesday, September 9, 2014

    In a recent Wall Street Journal article1, we learned of the closing of Rinehart Capital Partners LLC which specialized in emerging markets stock picking. Interestingly, the manager (Andrew Cunagin) blamed ...Read More

  • The Glide Path

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    by Mark Hebner — Monday, September 8, 2014

    IFA recommends a Glide Path strategy for all clients. This strategy reduces one index portfolio per year (1% less in asset allocation to stock indexes), based on the 100 Index Portfolio ...Read More

  • Help Wanted: Stock Pickers Need Not Apply

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    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

  • CAPE Fear: Valuation Ratios and Market Timing

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    by Weston Wellington — Friday, September 5, 2014

    As broad market indices such as the S&P 500 have set new record highs in recent weeks, many investors have become apprehensive. They fear another major decline is likely to occur and are eager to find ...Read More

  • It's the Disclosure, Stupid!

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    by Mark Hebner and IFA Contributors — Friday, September 5, 2014

    In  perusing today’s press releases (9/2/2014) from the Securities and Exchange Commission (SEC), we received a reminder of the fact that just because a registered investment adviser has a fiduciary ...Read More

  • A Textbook Case of Insider Trading

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    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

  • The S&P 500 Index Closes Above 2,000 and So What?

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    by Mark Hebner and IFA Contributors — Friday, August 29, 2014

    On August 26th, 2014, the S&P 500 Index closed above 2,000 for the first time by the skin of its teeth (2,000.02). To us at Index Fund Advisors, it is just a number and nothing to get excited about. We are ...Read More

  • Q&A with IFA: Unwinding a Large Stock Position

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    by Mark Hebner — Thursday, August 28, 2014

    Question: I hold a large stock position in the company that I used to work for. Can IFA help me unwind that position so that I can invest the proceeds into a diversified portfolio? Answer: In the past, we have ...Read More

  • Tough Times Continue for Stock Picking Fund Managers

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    by Mark Hebner and IFA Contributors — Tuesday, August 26, 2014

    In two recent Wall Street Journal articles1, Kirsten Grind detailed the continuing ascent of passive funds over active funds. Her first article began by noting Vanguard’s record in-flows which have ...Read More

  • Vanguard Quantifies the Impact of Performance-Chasing

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    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

  • Q&A with IFA: Reducing Risk with Options

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    by Mark Hebner and IFA Contributors — Friday, August 22, 2014

    Question: Can put or call options be used to achieve a more predictable risk-return tradeoff? For example, should I purchase put options to minimize equity portfolio losses? Note: The question above was ...Read More

  • Reaching for Yield—Non-Traditional Bond Funds

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    by Mark Hebner and IFA Contributors — Monday, August 18, 2014

    In late 2011, a few years after the beginning of the current era of very low interest rates, Morningstar launched the non-traditional-bond category. According to Morningstar’s Eric Jacobson, this ...Read More

  • Pension-Gate: Some Good News and Bad News

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    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

  • Fidelity Agrees to Settle 401(k) Lawsuits

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

    A little less than a year ago, we published this article about Fidelity facing a class action lawsuit by its employees alleging that the firm put them into costly proprietary funds in the firm’s ...Read More

  • Invest Like a Hedge Fund? Thanks but No Thanks!

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

    The Wall Street Journal recently featured an article, How Individual Investors Can Invest Like a Hedge Fund, that caught our attention. In light of recent poor performance which we have documented here and ...Read More

  • State Pension Plans - A Deeper Look at Performance

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    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

  • Quantifying the Value of Tax Loss Harvesting

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    by Tom Allen and Mark Hebner — Tuesday, August 5, 2014

    Tax loss harvesting is one service provided by most financial advisory firms and is one of the hardest to quantify in terms of value added. The professional opinion on this topic ranges from the “do it ...Read More

  • Weston Wellington on Dimensional's Philosophy

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    by Weston Wellington — Tuesday, August 5, 2014

    Weston Wellington, Vice President of Dimensional Fund Advisors, explains how he came to embrace Dimensional's scientific approach to investing. Weston explains how the ideas discussed at Dimensional ...Read More

  • The Active vs. Passive Debate Plays Out on MarketWatch

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    by Mark Hebner and IFA Contributors — Tuesday, August 5, 2014

    Those of us who are old enough to have watched 60 Minutes in the 1970s will undoubtedly remember the Point/Counterpoint segment which featured liberal and conservative spokesmen debating hot button issues of ...Read More

  • FINRA Takes a Step in the Right Direction

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    by Mark Hebner and IFA Contributors — Monday, August 4, 2014

    A few months ago, we published an article about the problem of brokerage clients not being able to rely on information about their broker in FINRA’s BrokerCheck because of the ease with which brokers can ...Read More

  • DFA Wins Another Survey of Financial Advisors

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    by Mark Hebner and IFA Contributors — Friday, August 1, 2014

    Market Strategies International just released its 2014 annual Advisor Brandscape report from its Cogent Reports Division™, and once again, Dimensional Fund Advisors (DFA) came out on top. The survey of ...Read More

  • Some Discouraging Results from Gallup

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    by Mark Hebner and IFA Contributors — Thursday, July 31, 2014

    A few months ago, Gallup, Inc. conducted a poll that asked 1,026 Americans to choose the best option for their long-term investments. Here is how they answered: Real ...Read More

  • Active vs. Passive — A Look at Pensions in the U.K.

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    by Mark Hebner and IFA Contributors — Wednesday, July 30, 2014

    In the past month, we have published two articles on the state of investment management in the U.K. In that regard, we found another video from our friends over at Sensible Investing that puts yet another nail ...Read More

  • Risk Savvy—How to Make Good Decisions

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    by IFA Contributors — Tuesday, July 22, 2014

    A New Book by Gerd Gigerenzer Innumeracy is a word coined by cognitive scientist Douglas R. Hofstadter in the early 1980s to describe a lack of basic mathematical ability as it applies to everyday life. Later ...Read More

  • Q&A with IFA: Market Timing with Moving Averages

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    by Mark Hebner and IFA Contributors — Friday, July 18, 2014

    Question: Some researchers argue that a market timing strategy based on buy/sell signals generated by a 50- or 200-day moving average offers a more appealing combination of risk and return than a buy-and-hold ...Read More

  • Understanding Equity-Indexed Annuities

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    by Mark Hebner and IFA Contributors — Thursday, July 17, 2014

    Recently, a client asked us about potentially buying an equity-indexed annuity (EIA). Not to be confused with a variable annuity, an EIA is not held in a segregated account exclusively for the ...Read More