If the evolution of indexing over the decades tells us anything, it tells us today’s budding index products “are not your father’s” index.
Posts From Christopher Carosa, CTFA
Plan sponsors want a more robust way to analyze. This technique may have saved 401k investors significantly last year.
Job recoveries from financial crises are traditionally slow. Poor credit markets and government policies continue to hamper small business and consumer spending, calling into question whether we’re about to emerge from recession. Worse, once we do, bond investors might be in for an unpleasant surprise.
If you’re a fiduciary worried about potential liability, be warned. Commodities trading remains speculative and may not be appropriate for unsophisticated investors – no matter what the TV tells them.
The wildness of the equity markets and the uncertainty of our economic environment appears to be opening the eyes of the typical fiduciary to more exotic investments. The practical implication may mean greater potential liability.
The active investing vs. passive investing argument has become passé. Perhaps we may be nearing a new consensus where it’s no longer active OR passive, but active AND passive.
Contrary to popular press reports, economic theory clearly suggests paying high fees is justified. Here’s the cruel irony and the greatest danger posed by the myth of high mutual fund fees: by taking back some of the responsibility normally delegated to professional advisers, an active fiduciary may in reality take on a greater fiduciary liability.
Investors have decided to flee two asset classes: stocks, perhaps because of their dramatic gains in the last six months; and cash, perhaps because of historically low interest rates. In either case, investors have signaled their lack of confidence in a near term recovery in the American economy.
Unless and until we can break the momentum of intertwined conflicts-of-interest, the greatest legacy we’ll leave our grandchildren’s children may be an outstanding bill to pay for spiraling public employee retirement benefits.
Diversification does not protect the investor when the entire asset class sinks. A recent study from Hewitt Associates suggests events may be placing plan fiduciaries in a historically precarious position.
