Each year Americans spend huge sums preparing to transition their assets to their heirs, engaging high-powered estate and tax planners who set up complex vehicles like family limited partnerships, life insurance, charitable remainder, charitable lead and various other kinds of trusts. Yet, despite the best efforts of top-notch professionals, the majority of plans fail. Why?
A family wealth mission statement (FWMS) is a relatively brief statement that encapsulates your family’s purpose, goals and standards.
Socially responsible investing (SRI) has captured nearly a quarter of U.S.-based assets. New evidence from one of the world’s largest sovereign wealth funds shows that those investors are sacrificing significant performance. Indeed, they are giving up more than 1% a year – effectively doubling the typical 1% AUM advisory fee.
My firm recently approved a new alternative investment, one that until recently was only available through hedge funds, the Stone Ridge Reinsurance Risk Premium Interval Fund (SRRIX).
Fama and French’s 1992 seminal research, which identified the value and size factors, was met with skepticism. Even the authors questioned the underlying economic rationale for their findings. With a quarter century of data, let’s look back and see if the skepticism was justified. Have value and small-cap outperformed?
Diversification has been called the only free lunch in investing. Many investors consider total-market funds, such as Vanguard’s Total Stock Market Index Fund (VTSMX), to be not only the most efficient (based on modern financial theory and, specifically, the efficient markets hypothesis) but also the most diversified. Leaving aside the question of whether Vanguard’s fund is the most efficient portfolio, let’s evaluate whether it’s the most diversified.
The evidence is overwhelming that past performance is a poor predictor of active managers’ performance. Studies have found that, beyond a year or two, there is little evidence of performance persistence. A newly published academic study reveals why it’s so hard for active managers to persistently beat a benchmark.
To see how well Janus’ actively managed funds have performed for its investors, I’ll compare the results of its actively managed equity funds to those of index funds from Vanguard and the structured asset class funds of DFA.
Previously, I analyzed the performance of some of the leading and largest actively managed mutual funds that focus on high-dividend strategies. Today, I’ll examine the strategy of investing in companies that have shown persistent growth in dividends.
While it is not yet resolved whether the low-volatility and low-beta anomalies can be fully explained by exposures to other well-known factors, their popularity certainly has changed the valuation metrics of low-volatility stocks. At the very least, this should raise a flag of caution for investors who have been enticed by the historical data.