Vanguard

Best Blogs of the Week #246

Posted by Anu Heda on Sep 19, 2016, in Best Blogs of the Week , tagged with BlackRock, Vanguard

Three posts this week to consider, including an interesting retirement income approach via Vanguard.

BlackRock – How investment advisors are changing with the times – How investment advisors are changing with the times – Last year, almost 20% of the surveyed viewed robo advice as a threat to their businesses, while 39% saw robo technology as an opportunity. This year’s study was significantly more optimistic: Only 14% saw robos as a threat, while nearly half saw them as an opportunity.

Vanguard – Changes to Form 5500: Lessons from the life of a beta fish – Benchmarking often leads to plan design enhancements that improve participant retirement outcomes. Of course, transparency into any individual plan could also produce an entirely different outcome. For example, the proposal indicates that the IRS and DOL could use the Form 5500 data for targeted enforcement of plans with compliance issues noted on the form. It wouldn’t be surprising for these plans to be subject to future audits.

Vanguard – Sustaining retirement income in a lower-return world – Two of the most popular are the “dollar plus inflation” and the “percentage of portfolio” rules. I’d like to offer what I consider an alternate solution: the “dynamic spending” strategy.

Best Blogs of the Week #244

Posted by Anu Heda on Sep 06, 2016, in Best Blogs of the Week , tagged with Invesco, State Street, Vanguard

Three excellent posts this week including a one-year post-mortem on the flash crash (Feels like many years ago).

Invesco – One Year Later– In the wake of last year’s volatility, many market participants pinned the blame on ill-conceived regulations and a lack of price visibility. Most agreed that something needed to be done to prevent another meltdown. One year later, has anything changed?

SSgA – 3 Reasons to Take a Look at Emerging Market Debt– But it’s important to understand that EM debt and EM equity are not the same. Over the past ten years, EM debt has more than doubled the return of EM equity, but with only one third the amount of volatility

Vanguard – 40 years of innovations in indexing – And the pitch for indexing wasn’t outperformance; it was to help investors minimize the cost of investing in a broad sense. If you think about it, not being broadly diversified has a cost, portfolio turnover generates transaction and tax costs, and, of course, active management advisory fees are a cost. Indexing hits at those headwinds straight on.

Dispersion for EM Debt via SSgA (not Flash Crash)

Best Blogs of the Week #242

Posted by Anu Heda on Aug 07, 2016, in Best Blogs of the Week , tagged with Franklin Templeton, Van Eck, Vanguard, William Blair

Four interesting posts this week highlighted by a game theory discussion via William Blair.

Franklin Templeton – Spotlight on Brazil– Once political stability is restored, tackling much needed structural reforms should be a priority, in our view.

Van Eck – Quality Can Be Rewarding in Emerging Markets Bonds – Overall, investors who maintained exposure to investment grade emerging markets sovereign bonds, with an allocation to BB-rated bonds or 20%, would have earned 7.55% over the past ten years versus 7.83% on the broader emerging markets sovereign index, with lower volatility and higher risk-adjusted returns as measured by the Sharpe ratio.

Vanguard – Do ETFs make the value of the underlying securities more expensive?– … strong or weak flows into certain ETFs or categories do not inflate or deflate prices any more than mutual fund flows or the collective purchases of individual investors into stocks like Apple or Facebook. Rather, ETFs reflect the valuation of the underlying securities they are composed of, which is driven by the collective wisdom of all market participants.

William Blair – Dimensions of Influence Drive Game Theory Analysis – What does this have to do with investing? Game theory provides a way for us to better organize and process the vast amount of information that affects global economies and markets.

the 5-factor spider graph; a Mike McLaughlin favorite

Straying from a Standard Can Be Dangerous

Posted by Anu Heda on Mar 03, 2016, in Thoughts , tagged with BlackRock, Vanguard

Our clients know we dig deep to unearth findings and recommendations worth pursuing. Sometimes that leads us to cataloging fact sheet data points across asset classes and boundaries (curious to the most frequent MPT stat in Belgium? Ask Mike!) In regulatory materials, there’s not much deviation from the status quo. Occasionally you find something slightly unusual and pause. We’re advocates of the Eaton Vance Fund-Approach-Features start to each fact sheet (like in this Small-Cap Fund). A qualitative description is a good place to deviate and try something compelling.

What is a bad place to deviate? Any $10,000 investment graph. Imagine our shock when seeing the above chart included in a fact sheet.

What’s your first question when looking at this?

If you’re like me, you’re wondering how come this chart begins at $22,500 (roughly)?

Well to understand why, you need to read the endnotes (located on page 2) describing the chart as showing growth of 10K from inception (Class A – 1994). You would need a chart starting in March 1994 to show the growth of 10K into $45,088.

I can’t find an industry leader that shows a chart like this on a retail mutual fund. The aforementioned Eaton Vance chart shows the standard practice of starting at 10K, 10 (or 5) years ago.

Vanguard and BlackRock exemplify the standard Web practice with different time durations but always beginning at a standard $10/$100K.

Though most likely compliant, this chart feels dishonest in its departure from industry standard practices.

Best Blogs of the Week #217

Posted by Anu Heda on Feb 01, 2016, in Best Blogs of the Week , tagged with Franklin Templeton, Vanguard

Equity market volatility continues increasing (in the short-term) and the industry’s blogs react precisely. No less than 7 posts this week on the subject. We captured our favorite 2 from Franklin Templeton and Vanguard.

Franklin Templeton – Will Market Volatility Put Rate Rises on Hold—for Now? – Taylor’s base-case scenario for 2016 is more optimistic than the market consensus, and he has rising hope for future rises in interest rates.

Russell – Diversification – Not feeling that great? – … the temptation for investors to abandon portfolio diversification and chase the “winning” asset class.

Vanguard – Don’t do something – just stand still. – Intellectually, we know that exiting markets during downturns is counterproductive. But action always seems better than inaction.