The Carlyle Group is a global equity fund. A private equity fund, Carlyle Asia Growth Capital Partners III, chose Topia because of all the Korean hagwons (privately owned cram schools that are more numerous than public schools), Topia is the most transparent according to Wayne Tsou (managin director of Carlyle Asia Growth Group).
Topia specializes in English teaching and made about $32 million last year and is expecting 50% groth this year.
This is a summary of a May 4, 2007 JoongAng Daily article by Hwang Young-jin. I'm afraid I don't have a link for you.
Here's an interesting article on new Barclay's ETFs that focus on various parts of the REIT index. The new ETFs will be very specialized when they're ready:
Barclays Global Investors of San Francisco has five iShare ETFs in registration that would follow indexes from the National Association of Real Estate Investment Trusts in Washington: the iShares FTSE NAREIT Residential Index Fund, iShare FTSE NAREIT Industrial/Office Index Fund, iShares FTSE NAREIT Retail Index Fund, iShares FTSE NAREIT Mortgage REITs Index Fund and iShares FTSE NAREIT Real Estate 50 Index Fund.The article also mentions other REIT-focused ETFs and mentions that REITs have been outperforming the market for 7 years - this could mean it's a bad time to invest in REITs because they can't outperform forever...
As I sold China Telecom do to risk Morning Star warned me about, I started thinking I needed to do more indexing. I usually tell people that I put most of my money in index funds and then a little money I manage actively investing in gold stocks and REITs in an effort to diversify.
Of course, my regular readers will know that's not true. For example I own some Marvel. That stock has taken quite a beating (I've owned it before and sold at around 30 a while back - then bought back in around 20) and I was thinking this morning about buying more. Next thing I know the stock's up 7% to 17.24 as they raised revenue forecasts for next year. I haven't bought more MVL yet (still thinking).
I was also looking around for good companies with beat down share prices because of my OVTI story. I had bought it back in June of 2004 after some bad news and sold it today - it was up around 70%. Somewhere around that time MBNA (the credit card company) also went way down and I thought I should buy, but didn't. Share prices doubled in the next few months.
So it's certianly possible to buy good stocks cheap when investors overreact and turna nice profit. Even beat the market. Of course one day one of those stocks might never recover...
Those of you who are already familiar with ETFs may wish to skip to the last few paragraphs for the investing comments. We begin with an explanation for those who are less familiar.
The first Exchange Traded Fund was created in 1993 by the Standard and Poor's Deposit Receipt (SPDR, pronounced "Spider"). SPDRs gave investors an easy way to track the S&P 500 without buying an index fund, and they quickly grew in popularity.
An ETF tracks an index, but can be traded like a stock. ETFs bundle together the securities that are in an index and don’t track actively managed mutual fund portfolios. This is because most funds that are actively managed only disclose their holdings a few times a year, so the ETF would not know when to adjust its holdings.
Investors can do almost anything with an ETF that can be done with a normal stock, such as short selling. Because ETFs are traded on stock exchanges, they can be bought and sold at any time during the day, unlike most mutual funds. Their prices will fluctuate every moment of the day just like any other stock price, and an investor will need to have a broker purchase them in order to invest. The negative side of that, of course, is the necessary commission that must be paid to the broker.
On the positive side, ETFs are more tax-efficient than mutual funds, and since they track indexes they have very low operating and transaction costs. Also, there are no sales loads or investment minimums required to purchase an ETF.
One way to decide which ETFs are good for you is to select the largest company in each market-capitalization weighted S&P sub-industry index, according to Forbes. Another way would be to select the sub-industry index component company with the highest S&P Stock Appreciation Ranking System (STARS) ranking. The higher the better.
For example, fertilizers and agricultural chemicals returned 93% as a sector in 2004, and the highest STAR-ranked stock in the group is Monsanto (NYSE: MON). With three stars, eBay (NASDAQ: EBAY) leads the Internet retail group, while Yahoo! (NASDAQ: YHOO) is ranked highest in the Internet software and services industry. How you choose your ETFs is up to you, but keep in mind that your ultimate goal is a balanced portfolio.
For example, I’m invested in DVY or iShares Dow Jones Select Dividend Index. This tracks Dow stocks with good dividends, many of which happen to be mid cap financials. I’m also invested in EFA or iShares MSCI EAFE Index Fund which contains stocks from Europe, Australia, and the Far East. I need to know which stocks, sectors, and geographic regions are held by an ETF (or a mutual fund for that matter) before I can balance my portfolio.
This article from the New York Times but republished in the International Herald Tribune forecasts bad times ahead for hedge funds, similar to the tech bubble of a few years back. This is because of the huge amounts of capital heading toward hedge funds.
"It is completely obvious that this will end badly - for the firms, investors, everyone," said Seth Klarman, founder of Baupost Group, which manages $5 billion. "No area of financial endeavor is immune from the effects of competition."
I know you don't come here for jokes, but this might not be a joke. It is funny though. Mark Cuban, the Maverick owner, "claims he will soon start a stock fund that will wager on sports events, rather than on equities in the stock market."
On a message board I frequent, there was recently a question about mutual funds. Which should I invest in? Large cap? Mid cap? Small cap?
I said:
"Index fund investing"Someone disagreed, arguing that we pay to beat the market, not match it, and that TRMCX has done just that since he bought it. And it's up 10% this year vs. 3% for the S&P (tracked by VFINX). There was a link to the quote for TRMCX titled "A litle research can be a dangerous thing".Index funds are the way to go. Actively managed funds (like all those mid-cap growth, large-cap blend funds) do not beat the indexes over time, and are more expensive to invest in. I suggest Vanguard 500 index fund. You may want to supplement that with REITs, metals, and bonds.
MY reply:
"A little dangerous research"Take a look at a ten year chart of the Dow, the Nasdaq, the S&P 500, and TRMCX. Of course your fund hasn't been around ten years, but close (1996).
TRMCX has gotten lucky the past few years. So has just about every other small and mid cap fund. Mid caps won't always outperform the market (look at the ten year chart).
Now consider cost: over ten years 10,000 in your actively mnagaed fun will cost you $1,120 (0.91% expense ratio). In my VFINX that same investment will cost you $230 (0.18% expense ratio).
Now consider the odds. Can you name one actively mangaed fund that beats the market all the time? TRMCX has been lucky since just before 2001. Prior to that TRMCX underperformed. It was beaten badly by the index from its inception until late 2000. Actively managed funds underperform sometimes, but they always cost more.
Here's an interesting article about the virtues of passive investing but also argues that a somewhat active approach is the best. The author concludes:
Active management of stock market investments certainly may reduce volatility of investment returns and I would not be in the business if I did not believe superior returns are also possible, but when you talk with any investment advisor make sure you are confident that his or her answer to the superiority of active management over passive management makes sense to you.
So I just wrote about why index funds make sense. The idea then becomes to track the market at the least cost. Enter Vanguard whose total market fund has an expense ratio of .20% and whose Vanguard 500 index fund has a ratio of .18%. Pretty cheap.
Now add on a $10/year fee for an IRA with less than $5,000 and a $2.50/quarter fee for accounts with less than $10,000 invested. All of a sudden things are not so cheap for small investors like me. While holding ETFs in a ROTH IRA doesn't take full advantage of the tax benefits, it may still be the way to go.
I've been reading The Great Mutual Fund Trap which argues that since fund managers don't beat the indexes over time, there's no reason to pay the higher expense ratios associated with actively managed mutual funds. Sure people can argue that some magers beat the indexes for a while, but I plan to retire in 35 years. How many funds have beaten the index over the past 35 years? How many have gone bust? I bet many more have gone bust than have beaten thetotal market over the past 35 years. And how do I know which (if any) fund will beat the market over the next 35 years? I don't. Index funds it is, although I still plan to hold individual stocks, particularly REITs and precious metals.
I found some interesting information to help allocate assests. DVY, an ETF I own consists largely of mid cap financial stocks, utilities, and telecoms. The article says it can be used to add a value play to an otherwise aggressive-growth oriented portfolio.
The top ten holdings:
ALTRIA GROUP - MO
BANK OF AMERICA - BAC
COMERICA INC - CMA
DTE ENERGY - DTE
EASTMAN CHEM - EMN
FPL GROUP INC - FPL
GENERAL MOTORS - GM
NICOR INC - GAS
PEOPLE BK CONN - PBCT
PNC FINL SVC - PNC
While I have some growth stocks, I lean more toward value stocks with nice dividends. This ETF gives me a nice basket of value stocks with nice dividends and comprises about 10% of my portfolio.
I have owned XLF (an ETF that tracks financials) for a few months now. I was considering selling it because financial stocks have been going down on interest rate fears. This article, however, says that it's time to "start building a bullish posiion." because fears about rates and litigation have led to too much selling.
I might sell anyway, regardless of whether it's time to be bullish or bearish on financials. A look at the 6 month chart shows that XLF tracks the S & P 500 pretty closely. Why not just buy IVV or SPY (an ETF that tracks the S & P 500) and save a bit on the expenses. XLF has an excellent .27% expense ratio, but SPY has a .12% expense ratio while IVV is .09%. VTI is another possibility designed to track the entire US stock market for .15%.
I've started looking for mutual funds and ETFs that follow the markets of China, India, and Thailand because I read an article (sorry I can't link to it, but I read it in Kuala Lumpur and can't find it online) about how these three countries are expected to perform quite well.
As always, remember that I'm just here to share my stock market ideas. I don't claim to be an expert so you always have to do your own research. Don't go buy Chinese stocks and claim that I told you to. I'm just saying that you might want to do some research on these three markets.
Please visit a sponsor, Custom Embroidery. Custom embroidery superstore sells custom embroidered clothing.
In an article I recently read, http://www.usafairtrade.com/icplan.htm, Warren Buffet mentions that he's investing in foreign currency due to the weakening US dollar. The general consensus seems to be that the dollar will be weakening for a while (maybe a year though possibly longer according to Buffet).
I live in Korea, so my Korean salary is becoming more valuable in terms of US dollars but my US stocks are becoming less valuable in terms of Korean won. I plan to keep my investments in the US and in dollars, but I would also like to make money. A declining dollar may mean declining US stock prices.
The question then becomes how to invest in foreign stocks. For me the answer is to invest in exchange traded funds or ETFs. The ticker symbol IOO tracks the S+P global 100. This includes big US companies but also big foreign companies: the top ten holdings are AMER INTL GROUP AIG, BP Plc, CITIGROUP C, EXXON MOBIL XOM, GENERAL ELEC CO GE, Hsbc Hldgs, INTEL CORP INTC, MICROSOFT CP MSFT, PFIZER INC PFE, WAL-MART STORES WMT.
Then there's EFA. the summary:
The fund uses a representative sampling strategy in order to try to track the MSCI EAFE Index. The fund invests in stocks from Europe, Australia, and the Far East with concentrations similar to those of its index.
Finally, there's EPP
The iShares MSCI Pacific ex-Japan Index Fund seeks to provide investment results that correspond generally to the price and yield performance of publicly traded securities in the Australia, Hong Kong, New Zealand, and Singapore markets, as measured by the MSCI Pacific Free ex-Japan Index.