Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Indexing looks particularly good this year
Old 09-04-2011, 10:15 AM   #1
Thinks s/he gets paid by the post
Htown Harry's Avatar
 
Join Date: May 2007
Posts: 1,516
Indexing looks particularly good this year

Our many fans of index funds will like this bit of news:
Funds Trailing Stock Market by Most Since 1998, JPMorgan Says - Bloomberg
"Stock mutual funds are having their worst year since 1998 relative to their benchmarks, as higher volatility makes it harder to pick stocks, according to JP Morgan.

Among 2,806 funds tracked by the brokerage, 47 percent underperformed their benchmarks by more than 2.5 percentage points this year, the most since the 55 percent recorded in 1998. Only 13 percent of the funds beat the market by the same margin. The underperformance accelerated last month, with the proportion of trailing funds almost doubling from July, according to JPMorgan data..."
The article goes on to say this trend could be a positive for the market over the next few months:
"Since 1995, there had been nine years when more funds trailed than those that beat from Jan. 1 through Aug. 31. The market rallied in the last four months of a year in all but 2008, with the S&P 500 rising 8.5 percent on average, JPMorgan data showed."
What they don't say is whether all of those trailing fund managers did anything to close the gap as the market rose. I'm guessing they didn't.
__________________

__________________
Htown Harry is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-04-2011, 10:27 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 7,883
Thanks. As one who primarily just follows the indexes while investing, at least there some comfort in the ups and downs
__________________

__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
easysurfer is online now   Reply With Quote
Old 09-04-2011, 10:30 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Nov 2006
Posts: 2,268
I wonder how the stats would look if they only looked at funds with low expense ratios and compared them to their index. We all know that indexing will always beat the avg actively managed fund, but there are funds with low expenses that beat their index most years. I'm specifically talking about Vanguard and Fidelity funds but there are others. Ive owned Fidelity ContraFund and Fidelity Low Priced Stock forever and they outperform their index by a good chunk short term and long term.
__________________
utrecht is offline   Reply With Quote
Old 09-04-2011, 11:00 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,615
The Vanguard Target Retirement funds (all index funds) are doing better than the IFA portfolios of DFA funds (small-cap and value-tilted) for the same stock:bond ratios this year as well.

For example, Vanguard Target 2020 with 35% bonds has YTD return of -2.1%
while the IFA55 with 35% bonds has YTD of -5.3%. It seems too much foreign, small-cap, or value have lowered returns in 2011.
__________________
LOL! is offline   Reply With Quote
Old 09-04-2011, 02:22 PM   #5
Thinks s/he gets paid by the post
steelyman's Avatar
 
Join Date: Feb 2011
Location: Triangle
Posts: 3,218
Quote:
Originally Posted by utrecht View Post
We all know that indexing will always beat the avg actively managed fund, but there are funds with low expenses that beat their index most years.
Although I really don't want to spark any debates, I am also less sure about the notion that indexing always wins out. If one can believe the Morningstar tools that report total return over various time periods, it tells me that of the funds I have in my retirement accounts, the ones that land at the bottom of the heap (by a pretty substantial amount) over a 10-year time frame are broad indexes: total stock market and international index (both Fidelity/Vanguard).

Maybe that trend will change over time, I will still keep a good amount in them regardless.
__________________
steelyman is offline   Reply With Quote
Old 09-04-2011, 02:35 PM   #6
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
Quote:
Originally Posted by Htown Harry View Post
What they don't say is whether all of those trailing fund managers did anything to close the gap as the market rose. I'm guessing they didn't.
The managers might not have done anything, but their bosses probably implemented their own version of "survivor bias"...
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 09-04-2011, 03:11 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Pretty funny, actually. High volatility with a sideways or declining trend is often described as 'a stock picker's market.' Guess not.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Old 09-04-2011, 04:48 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Nov 2006
Posts: 2,268
Quote:
Originally Posted by steelyman View Post
Although I really don't want to spark any debates, I am also less sure about the notion that indexing always wins out. If one can believe the Morningstar tools that report total return over various time periods, it tells me that of the funds I have in my retirement accounts, the ones that land at the bottom of the heap (by a pretty substantial amount) over a 10-year time frame are broad indexes: total stock market and international index (both Fidelity/Vanguard).

Maybe that trend will change over time, I will still keep a good amount in them regardless.
VTSMX which is Vanguard Total Stock Market index ranks top 18% of all funds in that category over the past 10 yrs.

VWIGX which is Vanguard International Index ranks top 16%.

These are not at the bottom of any heap that I know of. If they are at the bottom of whatever heap of funds you have available in your 401k, then congrats to you.
__________________
utrecht is offline   Reply With Quote
Old 09-04-2011, 05:33 PM   #9
Thinks s/he gets paid by the post
steelyman's Avatar
 
Join Date: Feb 2011
Location: Triangle
Posts: 3,218
Quote:
Originally Posted by utrecht View Post
VTSMX which is Vanguard Total Stock Market index ranks top 18% of all funds in that category over the past 10 yrs.

VWIGX which is Vanguard International Index ranks top 16%.

These are not at the bottom of any heap that I know of. If they are at the bottom of whatever heap of funds you have available in your 401k, then congrats to you.

As I said, my wish is not to ignite debates. From what I read, there is plenty of that over at a whole 'nother site

But I think I might need to cough up the annualized 10-yr total return numbers to which I referred, as my earlier post was admittedly vague. So here are the top and bottom five funds in my case:

Emerging Markets14.36%
New Markets Income11.93%
Permanent Portfolio11.84%
Capital & Income9.79%
Real Estate Investment9.79%
Fid US Total Bond Index5.47%
Fid Intl Index4.87%
Fid Brokerage & Investment3.93%
Vanguard Total Stock Mkt3.72%
Fid Total Stock Mkt3.65%

I am of course as the mercy of trusting the numbers that MS Portfolio X-Ray reports, and who knows if a longer time period might yield different results (they do offer 15 years, but most of these funds do not appear in that case).

NB: I am not saying that anyone should buy or bail in any of these!
__________________
steelyman is offline   Reply With Quote
Old 09-04-2011, 05:35 PM   #10
Thinks s/he gets paid by the post
GregLee's Avatar
 
Join Date: Oct 2010
Location: Waimanalo, HI
Posts: 1,881
Quote:
Originally Posted by utrecht View Post
VTSMX which is Vanguard Total Stock Market index ranks top 18% of all funds in that category over the past 10 yrs.

VWIGX which is Vanguard International Index ranks top 16%.

These are not at the bottom of any heap that I know of.
They're not?? How about the top 18%/16% of funds in "that category" (whatever exactly this is)? Those two funds are presumably at the bottom of those heaps. So you do, after all, know of such heaps.
__________________
Greg (retired in 2010 at age 68, state pension)
GregLee is offline   Reply With Quote
Old 09-04-2011, 05:43 PM   #11
Thinks s/he gets paid by the post
GregLee's Avatar
 
Join Date: Oct 2010
Location: Waimanalo, HI
Posts: 1,881
Quote:
Originally Posted by steelyman View Post
I am of course as the mercy of trusting the numbers that MS Portfolio X-Ray reports, and who knows if a longer time period might yield different results ...
But, as indexing enthusiasts will doubtless soon point out, in your comparison, you don't appear to be controlling for risk. Naturally, you expect more risky funds to give higher returns.
__________________
Greg (retired in 2010 at age 68, state pension)
GregLee is offline   Reply With Quote
Old 09-04-2011, 05:47 PM   #12
Thinks s/he gets paid by the post
steelyman's Avatar
 
Join Date: Feb 2011
Location: Triangle
Posts: 3,218
Quote:
Originally Posted by GregLee View Post
But, as indexing enthusiasts will doubtless soon point out, in your comparison, you don't appear to be controlling for risk. Naturally, you expect more risky funds to give higher returns.

Good point, Greg. I also didn't indicate how much I have in each of those funds. Turns out most of it is in the indexes.
__________________
steelyman is offline   Reply With Quote
Old 09-04-2011, 09:43 PM   #13
Thinks s/he gets paid by the post
 
Join Date: Nov 2006
Posts: 2,268
Wow. The emerging markets fund beat the Vanguard Total Stock Market index fund. You're right, indexing is obsolete!

My chocolate cake tastes better than your Nyquil. I guess I should eat cake next time I get sick.
__________________
utrecht is offline   Reply With Quote
Old 09-04-2011, 10:04 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by utrecht View Post
Wow. The emerging markets fund beat the Vanguard Total Stock Market index fund. You're right, indexing is obsolete!

My chocolate cake tastes better than your Nyquil. I guess I should eat cake next time I get sick.

__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Old 09-04-2011, 10:20 PM   #15
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
But you all are overlooking the most significant finding in that whole table. The Vanguard TSM is beating the Fidelity one by 7 whole basis points! Whoohoo! Go Vanguard!

DD
__________________
At 54% of FIRE target
DblDoc is offline   Reply With Quote
Old 09-04-2011, 11:39 PM   #16
Thinks s/he gets paid by the post
photoguy's Avatar
 
Join Date: Jun 2010
Posts: 2,301
Quote:
Originally Posted by DblDoc View Post
But you all are overlooking the most significant finding in that whole table. The Vanguard TSM is beating the Fidelity one by 7 whole basis points! Whoohoo! Go Vanguard!

DD
7bp doesn't sound like much but compared to a 4% w.r. that's almost 2% for free!
__________________
photoguy is offline   Reply With Quote
Old 09-08-2011, 10:27 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,633
Just read that Bill Gross acknowledged calling the demise of Treasuries wrong. He actively pulled out a while back and underperformed his index by 1.26%.
__________________

__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Leaving Ameriprise - One Year Later Lisa99 Hi, I am... 69 10-17-2011 10:20 AM
Walmart Reports Good Quarter, Raises Full Year Guidance haha Stock Picking and Market Strategy 6 08-21-2011 08:08 AM
First RV trip of the year dm Travel Information 10 07-15-2011 12:51 PM
"7 Reasons U.S. Needs a Good Depression Now" Retire Soon FIRE and Money 11 07-05-2011 04:03 PM

 

 
All times are GMT -6. The time now is 10:25 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.