Skip navigation

So who is moving clients to cash?

or Register to post new content in the forum

45 RepliesJump to last post



  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Jul 18, 2008 2:31 pm

[quote=Hobby Bull]80% of fund managers cannot beat the index. 100% of index funds cannot beat the index. 

  No.  If you want to talk hard numbers:   100% of index funds will underperform the an average of about 40 - 50 bps (yea, there are some "expensive" index funds out there - if you go Vanguard funds or ETFs you can keep it lower).   It's not 80% of fund managers that will underperform the index, it's actually in excess of 99% will underperform the index, and they do so at an average of about 100 - 120 bps.   You weren't here for the portfolio management thread, but lets keep in mind I'm talking U.S. (and even euro) Large Caps.  [/quote]

That's why I use UIT's in VA's. They've outperformed the indexes by a wide margin, net of ALL fees.
Jul 18, 2008 4:55 pm

wow- that’s quite a statement! Must be some incredibly smart people–to pick UIT stocks better than M Fd  stock mgrs. That’s a new one.

Jul 19, 2008 12:11 am


You could always use the SPY for one piece, and the IWF/IWD for another piece if you can't decide (although, I'd have no problem with going to IWF/IWD completely).   I think as you are doing this the right way Prato (research, strategy, etc.) - it's important to realize that those funds probably achieved their excess return by "fishing in ponds" that aren't included in the benchmark index - when you start dedicating [larger] chunks of your portfolio to an index, it's important to remember that if you want exposure to assets that are not included in that index, you must integrate those assets separately on your own (i.e. in the past you defer that decision to the fund managers - now you are making the decision yourself, not only to be exposed to XYZ assets, but in what proportions as well).  [/quote]   However there are now so many "alternatives" or "flexible portfolio" funds available that werent out there a few years ago, i.e. Rydex Mgd Futures, Blackrock Global Allocation, Ivy Asset Strategy, etc. that you could get exposure to those assets, leaving it to the fund mgrs to decide which assets. On the other hand, with ETF;s you can really express any idea you have, very efficiently.
Jul 19, 2008 2:47 am

“On the other hand, with ETF;s you can really express any idea you have, very efficiently.”

  My thoughts exactly. I get a lot of grief from y'all about this, but I prefer to deal in asset classes only. I feel that they drive returns (what % you have in each classes is most imp). Asset class indexes are simple in that they don't "mix" classes. One Am Fd often has a lot of cash, bonds, intl, and dom value for example. I just prefer more precision about that, so indexes are very handy that way. The tax-efficiency is better now AND for the next generation, IMHO. I can't understand why an index portfolio is a negative to most of you-- I see it as a positive, and as a conservative approach with no confusing bells/whistles.
Jul 19, 2008 2:53 am

BTW, I now find that there is no easier ACAT to get than a Non-Qual Jones port. The funds declined, yet the 1099 still hurt.

  Too bad Mr. Jim is smart enough to include an index port in the new platform. Bad for me, but GREAT for new Jones clients.