Mutual Funds

Alternative Mutual Funds: A Mixed Record

Since the 2008 stock market collapse, investors have been dumping money into alternative funds. The objective of these funds is decent returns, with limited risk; a pattern of returns not positively correlated to stocks. Alternative fund categories include: long/short equity, market neutral, managed futures, bear market, and multi-alternative (multiple strategies).

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Frontier Funds

S&P Small Cap 600 vs. Russell 2000

There is no standard definition of a small cap stock. The methodology used deciding what stocks are included in a small cap index can result in significant return differences. As of the middle of 2014, The S&P SmallCap outperformed the Russell 2000 for 12 of the last 19 years. The Russell 2000 has been tracking small caps for 30+ years; the S&P SmallCap 600 has been around for 19+ years.

S&P SmallCap 600 vs. Russell 2000

Fees

According to a May 2014 WSJ article, after 30 years, a $200,000 mutual fund investment (8% gross annualized return) grows to $1.4 million after paying the typical mutual fund annual fee of 1.25%. This was the average expense ratio for mutual funds for 2013 (source: Morningstar). The same investment grew to $2.0 million if annualized returns were the same but a 0.04% annual expense ratio (source: ETF.com).

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Leasing vs. Buying a Car

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Trusteed IRAs

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Covered Call ETFs

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Credit Rating Firms

September Effect

There appears to be no convincing evidence why stocks have traditionally performed poorly during September. Despite this historical information compiled from 1896 through 2012, investors and advisors alike should avoid any “system” or market timing program. The reality is causation is not correlation.

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Hedge Fund Basics

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Joe Granville

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