Posts filed under “Index/ETFs”
Welcome to post number six in our continuing series of most common investor errors.
Today, we are going to look at something that relates back to several of our earlier bullet points on fees and active management relative to investor structures.
Mutual Fund vs ETFs: The average mutual fund charges far more than the average ETF does. Whenever possible, I recommend substituting a low cost ETF over the more expensive Mutual fund.
The fund industry seems to have figured this out. Some have put out ultra-low cost mutual funds that typically mimic broad indexes. Others have ETF-ified their existing mutual funds, converting them into Exchange Traded Funds. Over the next decade, it would not surprise me to see nearly half of the existing mutual fund offerings morph into ETFs.
The bias against mutuals over ETFs is in the many ways that mutual funds can tag you with hidden costs, taxes, 12b-1 fees, and expenses. With ETFs, you pretty much get what you pay for.
Do note however: Even within the ETF universe, there are a wide range of internal fees. These expenses come off of the top of your investment performance, so it pays to watch them closely.
Reducing your costs is a surefire way to improve long term results. Consider what ETFs you can substitute instead of mutual funds.
Through November 2011, the S&P/Case-Shiller1 Home Price Indices declined 1.3`% for both the 10- and 20-City Composites in November over October. For a second consecutive month, 19 of the 20 cities covered by the indices also saw home prices decrease.
For year over year data, the 10- and 20-City Composites posted losses of -3.6% and -3.7% versus November 2010. These are worse than the -3.2% and -3.4% respective rates reported for October.
Click to enlarge:
More charts after the jump
In this week’s Barrons, Mike Santoli takes a closer look at the 30 individual Dow Industrial stocks. A few observations worth noting: The winners were stable, defensive companies, while the losers were financials and the more cyclically sensitive names. The 2011 winners marked their second consecutive successful year: McDonald’s (MCD), Home Depot (HD) and Kraft…Read More
Where the Buys Are Emerging markets are cheaper than their developed counterparts with far more growth. Earnings for the MSCI Emerging Markets index are expected to grow at 15% over the long term, versus 12% for MSCI World index. Recent Change P/E** 2011** Market Index Level YTD 1-Yr 3-Yr* 2011 2012 Price/Book Brazil Bovespa 52,482.82…Read More
The Dow Transportation Index was down almost 4 percent Tuesday and if there is any silver lining in the current market turmoil is that Trannies usually lead crude down, which will drop gas prices. The chart below shows the 12.2 percent swan dive in the Dow Transports since July 7th with crude oil barely moving. …Read More
Nasdaq OMX is rebalancing the Nasdaq-100 index (QQQs), which currently has one company — Apple (AAPL) as more than 20% of the index. The WSJ notes “Apple’s market capitalization is roughly $300 billion, twice that of Google. But its weighting in the index was five times that of Google. After the rebalancing, Google’s share of…Read More
I normally NEVER care about PR releases — they are rarely on topic, and mostly worthless — but this run of Dow Jones data was surprisingly relevant to the end of Q1: Dow Jones Industrial Average Long term data · Highest intraday level (12419.71 at 12:08:49 on 4.1.11) since June 6, 2008. · Down 1787.81…Read More
As of late, I have been intrigued by Japan. It is a part of the world that investors seem to detest ignore, despite signs of technical improvement. I’ve talked about this in the office, and with some of our clients who either own specific Japanese names — or live there. The thought process is Japan…Read More
My pal David Rosenberg points out that the Value Line Arithmetic Composite Index is at an ALL TIME HIGH. (This is an equal weighted price index of the 1650 stocks surveyed by Value Line, averaged daily). Dave writes: “The average stock, by the way, according to the Arithmetic Value line index, just hit a new…Read More