Ancient Funds That Are Still Beating the Market

The oldest mutual funds in the U.S. are still performing well, according to a recent article in Barron’s. The funds—some of which survived the 1929 stock market crash—include Central Securities (CET), Adams Diversified Equity (ADX) and General American Investors (GAM). They are all closed end, the article reports, and “might not be bargains” but have seen gains of over 30% this year, “handily beating the S&P 500.” According to the article, the performance of these… Read More

How to Figure Out Mutual Fund Dividend Yields

Unlike those of common stocks, dividend yields of mutual funds are difficult to calculate, according to a recent article in Barron’s. For common stock, the calculation requires dividing the annual dividend per share by the stock price. But the process is more complex for mutual funds, the article reports, “given how many pieces to the puzzle and different yield readings there are.” Therefore, investors rely on yields disclosed by advisors or by the fund themselves—but… Read More

How ETFs Work – And Why All Investors are the Beneficiaries

By Jack Forehand (@practicalquant) — Wall Street has a reputation for enhancing itself at the expense of the individual investor. And that reputation is well deserved. It has been very common throughout history for firms on Wall Street to develop products whose primary goal is to make money rather than adding value for the investors who purchase them. So if you are looking for someone to defend the practices of Wall Street, I am not… Read More

Does Mutual Fund Performance-Chasing Deserve its Bad Reputation?

A recent CFA Institute article discusses mutual fund performance-chasing which it says has drawn criticism. To evaluate how performance-chasing is faring in the U.S., the CFA Institute replicated momentum investing strategies using data spanning from 2000 to 2018, creating long-only portfolios made up of the top and bottom 10% of funds. The article reports: “We found the best-performing funds beat an equal-weight index of all equity mutual funds as well as the worst-performing funds by… Read More

Value Investor Channels Buffett

A recent Barron’s article profiles value investor Fred Copper, lead manager of the Columbia Overseas Valuefund, who has learned that the best way to beat his benchmark (the MSCI EAFE Value index) is to “not invest like it.” Copper has adopted a more flexible definition of value than some of his peers, based on his belief that traditional style benchmarks for value funds include a significant amount of cyclicality–meaning they include stocks that are sensitive… Read More

Nasty Capital Gains Season is Underway

A rising stock market carries with it some hefty tax bills for mutual fund shareholders, according to a recent Morningstar article. Many active funds have been dealing with asset outflows over the past few years, forcing fund managers to “sell appreciated positions to meet investor withdrawals, and that action triggers capital gains distributions.” The article explains some of the factors to consider in the current capital gains scenario, including the following: Investors will owe taxes… Read More

Fund Managers: The Latest Might Not be the Greatest

The investing mantra that touts patience as the best strategy for successful investing extends to choosing, and evaluating, fund managers. Research conducted by Robert W. Baird & Co. provides evidence that even the top-performing money managers endure prolonged periods where they underperform their benchmarks and/or their peers. Further, the findings show that “shortsighted” investors who switch to new managers based on recent successes (over a period of 1 to 3 years) might “leave wealth on… Read More

Swensen on the Dangers of Mutual Funds

Yale endowment manager David Swensen has produced exceptional long-term returns over the long haul. And in a recent op-ed for The New York Times, he takes aim at some of those who haven’t been able to do that: mutual funds. “Too often, investors believe that mutual funds provide a safe haven, placing a misguided trust in brokers, advisers and fund managers,” Swensen writes. “In fact, the industry has a history of delivering inferior results to… Read More