Vanguard boss & money managers accused of racketeering, fiduciary breaches

Where are you now John Bogle?
This news reaches us as we commemorate the 5-year anniversary, (almost to the day), of the mutual fund market timing scandals.
The Vanguard Group has enjoyed an excellent reputation for providing an even playing field for investors through low fees, passive investment styles and attention to conflicts of interest. Now [...]

Reflections on the 5-year anniversary of the mutual fund scandals

Nailing the mutual fund industry for market-timing in 2003 was a little like nabbing Dillinger for tax evasion. It was a minor crime, especially in comparison to the ongoing trickery and conflicts. Nevertheless, the legal effort had a positive broad cultural impact.
Chuck Jaffe looks back in an informative article.
Schooled by Scandal
Five years ago next week, [...]

It’s tough to make predictions — especially about the future

More fallout from taking a close look at the occupation of a stock analyst. It seems the analysts’ predictive power is difficult to find.
Take Wall Street’s opinion of Fannie Mae and Freddie Mac. The two mortgage giants have about $5 trillion in obligations, which means they are levered up around fifty to one. Housing prices [...]

The argument for stock picking keeps crumbling

In the bloody days of Enron, these youngsters swung some pretty big bats. Today, it looks as though the law has put them in their place. That leaves money managers of actively traded mutual funds with one less argument for why they should be trusted to make superior stock selections.
Analysts’ Accuracy on U.S. Profits Worst [...]

Morningstar enlivens (and muddies) debate on active ETFs

In an otherwise sound article, Morningstar misrepresents an intriguing evolution of the ETF by calling it “Quantitative-Active”. The ETFs analyzed in the piece are actually named Dynamic which, wisely, avoids the active/passive dualism altogether.
New computer models are evidently providing more robust asset allocation, and more precise correlation, through dynamic rebalancing. There is no good [...]

Apropos of green funds

“An idealist is one who, on noticing that roses smell better than a cabbage, concludes that they will also make better soup.”
- H. L. Mencken

More trouble with green funds

Sometimes it’s tougher to follow a trend than you think. The recent issue of Investment News may win the award for understatement of the month when it says that green investing is a “challenge”.
Going green isn’t easy, advisers and investors say
Identifying funds that truly invest in an environmentally conscious way is a challenge. [...]

Green funds: The latest “socially responsible” mistake

There are two reasons why investors choose “green” funds: 1. Greed, and 2. self-satisfaction.
The first choice makes you feel smart for cashing in on the green frenzy; the second makes you feel good for helping the environment. Neither has anything to do with rational investment decision-making. It’s ironic that these funds use the word “responsible”. [...]

Actively managed ETFs failing to catch on

The campaign for one of the latest investment vehicle “innovations” seems to be stalling. Perhaps investors are siding with John Bogle on this one, and deciding the whole idea is “absurd”.
It’s a new genre, but not yet a craze
You may have thought a limit had been reached on the number of ways fund managers could [...]

Expanding the concept of advice II

The current issue of the Journal of Financial Planning has an article on the evolving concept of legacy, in which the author analyzes the difference between tactics and vision. I think a handy way to cover the distinction is to refer to “hard power” and “soft power”, though I’m not sure the author would [...]