Frontier Markets Dangers
As of September 2013, the MSCI Frontier Markets Index (141 companies) was valued at $123 billion, a valuation < 1/3 of Apple. Being small can have negative consequences. For example, it has been estimated that it would take > 10 days to liquidate a $100 million position in a frontier market (but just an hour to dispose of a similar position in an emerging market).
Closed-End Bond Funds
Closed-end funds (CEFs) trade on exchanges and almost always trade at a NAV discount or premium. For example, at the end of September 2012, 70% of CEFs traded at premiums; a year later, 89% traded at discounts (67% traded at discounts > 5%). One risk often not considered is the fact may CEFs are leveraged, which can magnify yields, losses, and gains.
Since the introduction of its first fund (ICA) in 1934, 67% of the mutual funds offered by American Funds have outperformed their respective indexes on a 5-yearing rolling period basis through the end of 2012. Since 2003, 77% of its funds have beaten their indexes on a rolling 5-year basis; the percentage increases to 92% for rolling 10-year periods starting in 2003.
1.Fidelity: Indexing vs. Active Management
A 2013 survey by Richard Day Research of 648 couples shows that many couples approaching retirement have not reached agreement on a number of key issues.
2013 Survey of Couples Approaching Retirement
% of Couples
The Barclays U.S. Aggregate Bond Index was launched in 1976. Since its 1976 inception, the index’s worst year has been 1994 (-2.92%). Since 1993, the index has had just two negative years, 1994 and 1999 (a loss of ~ 1%). From the beginning of 2013 to the end of August 2013, the index had a total return of -6.8%.
Tactical Asset Allocation Funds
Tactical asset allocation funds allow managers to shift their asset mix; the goal is to exploit the market’s strong periods while avoiding its weaker periods. According to Morningstar, there were > 40 such funds as of September 2013. The track record of these funds has consistently lagged returns from a balanced portfolio (60% S&P 500 + 40% Barclays Aggregate Bond Index).
August 2013 Interviews
The September/October 2013 issue of Journal of Indexes includes interviews with a number of well-respected investment experts. Shown below are edited versions of two of those interviews.
John Bogle, founder of The Vanguard Group
Even if current P/E ratios see a small decline, 7% is a very rational expectation for annual stock returns (2% dividend + 5% earnings growth).
There are five different ways to invest in a MLP; each investment vehicle has different ramifications. There is no perfect way to invest in a MLP; the type of investor and the desire for current income will steer the advisor toward the best MLP asset and vehicle.
 Individual MLP Units