This week’s AAII Weekly Digest highlights these “must-read” AAII articles:
Investors can take advantage of an observed characteristic that predicts higher fund performance. As long as the fund keeps its strategy unaltered, and as long as the observed characteristic predicts good performance, investors will benefit by investing in the fund. This article discusses the research of Yakov Amihud and Ruslan Goyenko, which examined all actively managed stock mutual funds that invest at least 75% of their holdings in stocks. They discovered that many funds are “closet indexers,” but they also identified factors that investors may use to identify fund overperformance moving forward.
Over the last several years, health care ETFs have been strong performers. However, AAII’s annual review of the best-performing ETFs over the last five years found drastic changes at the top. AAII’s Jaclyn McClellan analyzes the ETFs with five years of annual return data and a minimum of $450 million in assets (or sufficient liquidity if the total assets were lower).
John “Jack” Bogle founded the Vanguard Group of mutual funds. In this conversation with AAII Journal editor Charles Rotblut, Bogle speaks about the common mistakes he’s seen investors make, high-frequency traders and his concerns about the ownership structure of most mutual fund companies.
Performance statistics are probably the single most scrutinized feature of any mutual fund. These figures are, of course, important indicators of how well a portfolio manager has performed in the past. But the question facing any prospective investor is: Will a stock fund manager with good past performance be able to sustain his or her track record? That means that at some point you have to look beyond the statistics to see who made the performance happen so you can form a judgment about future performance. You need to examine a fund manager’s approach. Here are 10 questions to ask to get a better feeling for whether a manager’s performance is sustainable.
Our Member Question for this week is:
When measuring the value of working with a financial adviser, which of the following is most important to you?
Vote to answer this week’s Special Question: If you work with a financial adviser, what advantages does the relationship offer versus going it alone?
Last Week’s Results:
Which of the following best defines financial success to you?
Poll results are as of 9 a.m. (Central) on Monday. 2,225 respondents.
A recent survey showed that fewer than one in five Americans feel like they’re living the “American Dream.” But how do you define that dream? Last week’s survey asked our readers how they define financial success. We then went on to ask how our readers define the “American Dream.” This blog post reveals the surprising results.
If you’re contemplating investing in mutual funds, you’ll want to arm yourself with some basic information. This AAII Investor Classroom, one of the many benefits of an AAII membership, gives you all the tools you need to get started. The topics covered include: how to break a tie between two funds; what to look for when reading a mutual fund statement; how to research mutual funds; and much more.