THE BIG SECRET THE MUTUAL FUNDS DON?T WANT YOU TO KNOW?INDEXING!
Non-indexed mutual funds try to keep it secret that actively managed mutual very funds rarely do better stock market indexes. The higher fees of the managed funds really make it hard for these funds to out compete indexed funds. Smart financial journalists occasionally rat out fund managers for not educating the public in this regard. When this happens the mutual fund managers make a feeble attempt at self defense by pointing to something called the 5% rule. This rule says that for a fund to market itself as diversified it cannot have more than 5% of 75% of the funds total assets in a single stock.
In other words, a fund can have 25% of its holdings in a single stock, but the remaining 75% must follow the 5% rule. The 5% rule was created by the Investment Company Act Requirement. Fund managers claim that this hampers their performance instead of admitting that they are in the business just to clip you for high fees while the mutual fund under-performs the general market. The truth is that the big killer is the herd mentality of active fund managers. They follow each other around buying and selling the same junk.
They flock to the same familiar companies and often overlook the new, obscure companies that show great promise. They take great comfort in knowing that, even if their fund misses out on a great opportunity, most of the others in its group will too. They also know that they can pull their huge fees out during the whole time your retirement savings are parked in their fund. Over the years they spend a lot of marketing money to make you think that they actually care.This is certainly not the attitude I want the manager of my retirement to have! You should be asking your self why the mutual funds don't just mimic the same portfolio stock composition as a major index like the S&P 500 stock market index. Well, some have and those that are indexed out perform actively managed funds at the minimum management cost.
For this reason I strongly recommend that if you can only buy mutual funds as in the case of the 401(k) then restrict your purchases to indexed funds like the Vanguard 500 (VFINX)..
ABOUT THE AUTHOR: Dr. Scott Brown, Ph.D., the Wallet Doctor, is a successful investor. Dr. Brown holds a Ph.D. in finance. The Wallet Doctor is sought after for investment advice and coaching. For more information visit Dr. Brown?s site at www.BonanzaBase.com or sign up for his investment tips at www.WalletDoctor.comHedge Funds Name Lehman Brothers Top Firm for Execution and Sales-Trading in Alpha Magazine Ranking
New York (ContentDesk via ContentDesk Direct) January 25, 2006 -- Hedge fund managers say Lehman Brothers provides the best trade execution for both New York Stock Exchangelisted equities and Nasdaq Stock Market shares, according to a survey published in the January/February issue of Institutional Investors Alpha, released today.To find the firms that are doing the best job of serving the trading need of hedge funds, Alpha retabulated the results of the survey of head equity traders at institutional money management firms that was published in November 2005 in Alphas sister publication, Institutional Investor, using only votes cast by the hedge funds that participated. Respondents were asked to rank broker-dealers on the quality of their execution and to rank the best electronic communications networks and alternative trading systems.Hedge fund respondents rank Lehman Brothers best in market knowledge, trading intelligence, the ability...
Hedge Funds Name Lehman Brothers Top Firm for Execution and Sales-Trading in Alpha Magazine Ranking
Hedge funds > Hedge Funds Name Lehman Brothers Top Firm for Execution and Sales-Trading in Alpha Magazine Ranking
Just what is Arbitrage Investment??
Just what is Arbitrage Investment?By ? 2005In the simplest of terms, Arbitrage means to exploit price differential.Usually it meant looking at differing sources of an investment, and if there was a price difference between Source A and Source B - then the investor / dealer / broker / manager would buy from the lower priced source, and sell on the higher priced source.Example:-The price of Stock ABC was $20 per share on Exchange XYZThe price of the same Stock ABC on another Exchange 123 - was $15The dealer would buy the stock from Exchange 123 for $15 - then sell on Exchange XYZ for $20 - making $5 per share profit (minus costs).Typically the price differential was very small - and trading had to be extremely quick and liquid - otherwise the markets could go against you in a very short time.Ten years ago Arbitrage was more commonplace than it is today - for a number of reasons.Nowadays, Arbitrage still exists, but either in limited formats and availability as direct arbitrage, or more...
Just what is Arbitrage Investment??
Hedge funds > Just what is Arbitrage Investment??
AMG Capital Group Launches Service To Provide Access To Futures Funds
AMG Capital Group, LLC today announced its formation as a wholesaler specializing in providing Broker Dealers, Registered Investment Advisors, and Financial Planners with access to public U.S. commodity funds and other domestic and offshore alternative investments.
George Y. Shinn, Founder and Managed Director of the new firm, was formerly a managing principal a CTA/CPO that places asset allocations with Commodity Trading Advisors on behalf of individual investors and fund of funds. Prior to that, Mr.
Shinn was Director of Operations for International Trader's Research, a leading CTA database service provider in La Jolla, California.
Mr. Shinn said AMG will operate independently as a wholesaler, but will also seek to develop partnerships with alternative asset management firms to construct portfolios of alternative investment managers. AMG plans to utilize proprietary research and in-depth knowledge of the industry to deliver access to the top risk-adjusted trading...
Hedge funds > AMG Capital Group Launches Service To Provide Access To Futures Funds
Altegris Investments Announces New Director of Hedge Fund Research
La Jolla, CA (ContentDesk) July 6, 2006 Altegris Investments Inc. is pleased to announce that Michael Ding has joined the firm as the Director of Hedge Fund Research. Mr. Ding was previously Vice President, Research and Investment Management, for Abria Alternative Investments, Inc. in Toronto, Canada, where he worked since June of 2003.
Prior to this, he was a Senior Investment Analyst in Alternative Investments for the National Bank of Canada, and a Hedge Fund Research Analyst for the Northern Trust Company, in addition to several financial analyst roles.