Archive for the ‘ETF and mutual fund ideas’ Category

Carlyle Asia Growth Group investing $20 million in Korean hagwon

Friday, May 4th, 2007

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.

Barclays introducing new REIT ETFs

Tuesday, February 20th, 2007

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…

Should I buy beaten down stocks or index funds?

Thursday, February 23rd, 2006

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…

Exchange Traded Funds

Thursday, May 19th, 2005

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

Hedge funds a bad place to be

Tuesday, March 29th, 2005

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.”

A little humor

Thursday, December 2nd, 2004

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.”

The argument against passive investing

Wednesday, November 24th, 2004

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”

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.

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”.

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.

I know that sometimes actively managed funds beat the index. But you never know which ones are going to beat the indexes, when, or for how long.

Passive investing

Monday, August 30th, 2004

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.

However, I think if you read the article you’ll see that the author’s “argument” for being a “diversified mutual fund investor” instead of investing in index funds is non existent. He says it’s better, but all the stats he presents seem to suggest otherwise. Here’s what I wrote before about index fund investing.

Vanguard Index funds & expenses

Tuesday, July 27th, 2004

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.

Index funds and expenses

Tuesday, July 27th, 2004

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.