Mutual Funds

Questions About Alternatives

Alternative investments are all the rage these days. Think through all the details, though, before deciding if they fit your financial plans.

Mutual fund companies fall all over themselves to sell financial advisors and their clients on “liquid alts” easily bought or sold or on hedge fund-like strategies with the daily liquidity offered in a mutual fund wrapper.

Advisors and Better Returns?

Can you quantify a smarter way to own mutual funds? Vanguard Group thinks so. It believes you – and specifically your advisor – could add more than three percentage points to your returns by adopting seven principles.

Vanguard, which specializes in low-costs index funds, recently published a report that lists the seven value-added types of advice that advisors can use to potentially fatten your performance. To make their idea a reality, of course, you need to choose the right fund manager.

Bull Market: Room to Run

Just because we’ve had a five-year rising market doesn’t mean its demise is near. We are in the fifth inning of a nine-inning long-term secular bull market in stocks, comparable to the 1982-1999 run. So declares Joseph Zidle, portfolio strategist for Richard Bernstein Advisors.

Handling Mutual Fund Bloat

Asset bloat in a mutual fund is akin to how we all sometimes feel after a fantastic meal: We can’t stop eating even though we know we’ll feel lousy and bloated if we don’t stop. Asset bloat in a mutual fund can be a big problem for you the investor.

How to Invest in Bonds Now

Bonds are a familiar asset to most investors. Maybe you’re one of the many who took advantage of the declining interest rates that fueled bond funds in the past few years. Rates always fluctuate, though, and our clients frequently ask, “What’s the best way to invest in bonds today?”

First, you need to know how bonds work. Your investment essentially lends money to a government or corporate entity that agrees to pay the investment back to you after a set time (the bond’s “maturity”) plus interest.

Evaluating Active Mutual Funds

If you’re like many investors, mutual funds constitute a big part of your portfolio. But how do you assess them, beyond their returns? Here are four aspects of evaluating your actively managed mutual fund holdings.

Who runs the show? Management is a vital consideration when you evaluate an actively managed fund designed and invested to beat market benchmarks.

How Small-Cap Funds Drift

Your actively managed mutual funds enjoy a lot of flexibility regarding types of investments. One problem: This flexibility often leads to style drift, a gradual change in the makeup of your investments (often toward stocks of larger companies), and that changes the risk and return of your overall portfolio.

The Rise of Mutual Fund Power

How did mutual funds come to dominate the entire capital markets landscape? Answer: an epochal shift in the 1980s, due mainly to the invention of the 401(k). Only recently have funds begun flexing their muscles in corporate government questions, although they remain largely passive investors.

To see how this all happened, here’s a quick history of equity ownership over the last 65 years: Since the end of World War II, the ownership of publicly traded American corporations has radically shifted hands. As the deck gets reshuffled, all the market players must adjust their strategy.

Smart Beta Funds: Why Bother?

So-called smart beta funds, which create new indexes that supposedly are better than the traditional ones, are popular these days. But you can adopt their approach and pay far less for the privilege.

Funds: Investor Activists at Last

If you don’t like how a company is doing its business, then sell the stock. That was the longstanding advice to individual investors, because one shareholder is unlikely to change management’s course. Now, though, mutual fund companies increasingly are involved in activists’ struggles to overhaul errant companies.

This means that individual investors can be part of a collective effort to hold executives to account for underperformance, overly generous pay or other policies that deplete shareholders’ returns.


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