ETF Does Not Mean Index Fund

Exchange-traded funds (ETFs) started out linked at the hip to low-cost, market-tracking index funds. The only ETFs available during the 1990s were those that followed well-known benchmarks such as the S&P 500 (ticker: SPY) and the Nasdaq 100 (ticker: QQQQ). That’s no longer the case.

Mutual Fund Managers Fall Short Again

Mutual fund performance is predictable. Like a broken record, mutual fund managers who attempt to outperform the markets have once again failed to deliver on their promise in most categories. That’s the bottom line of a new report released by S&P Dow Jones.

A Call for Ethics in ETF Advertising

The fund industry is notorious for comparing the performance of their products to the wrong benchmarks and even made-up benchmarks. This is done to make a fund’s performance appear to be superior relative to something — even if that something makes no sense. This decadent practice harms the credibility of an industry that has lost so much in recent years.

Investment Principle Matters to Principal

What you believe about how markets work has a meaningful impact on long-term return. Do you believe markets are relatively efficient or do you believe there are ample opportunities for excess profits? Your beliefs drive investment strategy and your strategy drives portfolio performance. Big picture beliefs about investing can be divided into two categories. First, [...]

Why Active Bond Funds Bomb

It’s hard for equity managers to beat their benchmarks, but it’s twice as hard for bond managers. A strong headwind pushes back performance. On average, actively managed mutual funds underperform index funds because higher fees drag down performance. Only 1 out of 3 actively-managed stocks funds beat its benchmark over a 5-year period. Less known [...]