Posts tagged ‘Mutual fund’

October 25, 2013

‘passively managed index funds outperform almost all actively managed funds’

by Grace

Economics professor Mark J. Perry shared some investment facts on the occasion of “Eugene Fama winning the Nobel Prize of Economics, largely for his path-breaking academic finance research on market efficiency that ultimately led to the introduction of low-cost mutual funds by Vanguard and others that pursue a passive investment strategy of buying and holding portfolios of stocks that track an index like the S&P 500”.

Here’s one fact that should get every investor’s attention.

Empirical evidence shows that passively managed index funds outperform almost all actively managed funds over long holding periods, adjusted for risk, taxes and expenses.

I used to work for a mutual fund company with a winning fund manager who consistently outperformed the market over more than 30 years, but he was the exception.  These days I’m a fan of index funds for most of my investing.



April 2, 2012

Rising contributions to 529 plans and other trends

by Grace

Rising Contributions to 529 plans

Recent market performance and the corresponding jump in personal savings bode well for college savings plans, even if the national savings rate is still not back to its 2010 levels. According to FRC, 2011 saw the most new contributions flowing into 529 plans on record, as shown by the chart below. If the financial markets continue to improve, we expect similar or even greater growth in 2012.

Other trends in 529 plans as reported by AKF Consulting Group:

  • Total number of plans has increased from 89 in September 2010 to 94 in February 2012, with the number of investment options offered among all plans now up to 1132.
  • More conservative investment options are being offered, with additional choices in money market funds, Treasury Inflation Protected Securities (TIPS) funds, and federally insured savings accounts and CDs.
  • Fees have dropped among direct-sold 529 plans, with an average reduction of nearly 10%.

A Return to Equities

AKF foresees a return to equities, in particular ETFs and index funds, based on investor activity in the fourth quarter 2011.  As college costs continue to rise, long-term investor realize they need to take on the risk of stocks in their 529 plans.

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