Oblivious Investor http://www.obliviousinvestor.com Low-Maintenance Investing with Index Funds and ETFs Mon, 20 Oct 2014 12:00:44 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.2 Should I Invest in Schwab’s Fundamental Index Funds? http://www.obliviousinvestor.com/should-i-invest-in-schwabs-fundamental-index-fund/ http://www.obliviousinvestor.com/should-i-invest-in-schwabs-fundamental-index-fund/#comments Mon, 20 Oct 2014 12:00:24 +0000 http://www.obliviousinvestor.com/?p=7319 A reader writes in, asking:

“I currently use three Schwab ETFs for my portfolio: Schwab U.S. Broad Market, Schwab International Equity, and Schwab Short-Term U.S. Treasury. But I’ve been reading about their Fundamental Index Funds and ETFs as well. The idea of allocating to companies according to sales and cash flow makes a lot of sense to me. Do you think it would be prudent to add some of these funds to my existing holdings?”

As a bit of background information: Traditional index funds (and ETFs) are market-cap weighted. This means that each stock (or bond) held in the fund is held in proportion to its market capitalization (i.e., the total market value of the company). For example, if Verizon makes up 1% of the U.S. stock market, a market-cap weighted U.S. “total market” index fund would have 1% of its portfolio invested in Verizon.

In contrast, “fundamental” index funds (and now, in some cases, “smart beta” funds) weight companies according to their “fundamentals” (i.e., metrics such as sales, cash flow, or net income).

While I don’t think its typically useful to compare the performance of two funds in order to see which fund is better (remember, picking based on past performance is often worse than picking randomly), I do think it can be helpful to plot the performance of two funds on the same chart to see how similar they are.

For example, with these various new types of not-so-passive index funds, it’s often enlightening to:

  • Look at where the fund falls in the tic-tac-toe-looking Morningstar style box (i.e., growth vs. value and small-cap vs. large-cap),
  • Find a plain-old Vanguard fund with a comparable position in the style box, and
  • Plot the two funds together on the same growth chart.

With regard to the reader’s question, let’s run through the above exercise with three Schwab Fundamental Index Funds.

Our first chart shows the Schwab Fundamental US Large Company Index Fund (SFLNX, in blue) and the Vanguard Large-Cap Index Fund (VLCAX, in orange), since the inception of the Schwab fund:

Large-cap

The following chart shows the Schwab Fundamental US Small Company Index Fund (SFSNX, in blue) and the Vanguard Small-Cap Index Fund (VSMAX, in orange), since the inception of the Schwab fund:

Small-Cap

And the final chart shows the Schwab Fundamental International Large Company Index Fund (SFNNX, in blue) and the Vanguard International Value Fund (VTRIX, in orange), since the inception of the Schwab fund:

International

You can see periods in each of these charts in which one fund outperforms the other, but the overwhelming takeaway that I see is simply how very similar the funds are.

And that’s typically how it goes when I look at a fund in one of these newer categories. They’re usually perfectly fine funds. (After all, going toe-to-toe with a low-cost index fund from the most respected provider of index funds is nothing to laugh at!) But there’s usually little substance behind the marketing message that these are a distinct improvement over traditional index funds. For the most part, they’re simply a new way of arriving at the same old portfolio (or very close to it).

Interested in economics? Pick up a copy of my latest book:

Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less

Disclaimer: Your subscription to this blog does not create a CPA-client or other professional services relationship between you and Mike Piper or between you and Simple Subjects, LLC. By subscribing, you explicitly agree not to hold Mike Piper or Simple Subjects, LLC liable in any way for damages arising from decisions you make based on the information available herein. Neither Mike Piper nor Simple Subjects, LLC makes any warranty as to the accuracy of any information contained in this communication. I am not a financial or investment advisor, and the information contained herein is for informational and entertainment purposes only and does not constitute financial advice. On financial matters for which assistance is needed, I strongly urge you to meet with a professional advisor who (unlike me) has a professional relationship with you and who (again, unlike me) knows the relevant details of your situation.

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Investing Blog Roundup: Buying Insurance http://www.obliviousinvestor.com/investing-blog-roundup-buying-insurance/ http://www.obliviousinvestor.com/investing-blog-roundup-buying-insurance/#comments Fri, 17 Oct 2014 12:00:23 +0000 http://www.obliviousinvestor.com/?p=7316 This week, I enjoyed three articles about buying insurance. Karen Haywood Queen shares a strategy for saving money on life insurance. Jim Dahle warns against a common (but poorly-reasoned) sales pitch for life insurance. And Michael Kitces offers a guiding overall philosophy on when and when not to buy insurance.

Investing Articles

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Interested in economics? Pick up a copy of my latest book:

Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less

Disclaimer: Your subscription to this blog does not create a CPA-client or other professional services relationship between you and Mike Piper or between you and Simple Subjects, LLC. By subscribing, you explicitly agree not to hold Mike Piper or Simple Subjects, LLC liable in any way for damages arising from decisions you make based on the information available herein. Neither Mike Piper nor Simple Subjects, LLC makes any warranty as to the accuracy of any information contained in this communication. I am not a financial or investment advisor, and the information contained herein is for informational and entertainment purposes only and does not constitute financial advice. On financial matters for which assistance is needed, I strongly urge you to meet with a professional advisor who (unlike me) has a professional relationship with you and who (again, unlike me) knows the relevant details of your situation.

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When to Tax-Gain Harvest Your Bonds http://www.obliviousinvestor.com/when-to-tax-gain-harvest-your-bonds/ http://www.obliviousinvestor.com/when-to-tax-gain-harvest-your-bonds/#comments Mon, 13 Oct 2014 12:00:05 +0000 http://www.obliviousinvestor.com/?p=7312 Last week’s article about tax-gain harvesting with bonds drew quite a bit of correspondence from readers. (To recap, the general idea is to sell a bond that has increased in value since you bought it — and which you have held for more than one year – and reinvest the proceeds in a similar, newly-issued bond with a comparable remaining maturity. In doing so, you effectively convert some of the interest income into long-term capital gain income, which is often advantageous due to the fact that long-term capital gains are taxed at a lower rate than ordinary income.)

The primary question readers had was: Are there cases in which it would not make sense to use such a strategy?

And the answer is that, yes, there certainly are some cases in which it wouldn’t make sense to tax-gain harvest your bonds.

For example, the desirability of the strategy depends on what type of bond we’re talking about.

  • It is most likely to make sense with corporate bonds,
  • It is less likely to make sense with Treasury bonds, because the interest on Treasury debt is free from state income taxes, whereas the capital gain income would, in most cases, be taxable at the federal and state levels, and
  • It is almost never going to make sense with muni bonds, because muni bond interest is tax-exempt at the federal level, whereas the capital gain income would be taxable at the federal and state levels.

In addition, there’s the possibility that something else tax-related would make you want to avoid increasing your income this year. For example, if there’s a particular tax credit for which you currently just barely qualify, but the capital gain would push your income over the eligibility threshold, tax-gain harvesting this year is unlikely to be advantageous. Or, if you’re a retiree collecting Social Security, and your income level is currently at a point where your Social Security is nontaxable — but realizing a capital gain would push you into the range where a significant portion of your benefits would be taxable this year — that’s a point against tax-gain harvesting.

In general, the analysis that you want to do is figure out how big the tax increase would be this year (due to the capital gain income) and how big the savings would be in future years (due to the reduced level of interest income). To get the best analysis possible at a DIY level (i.e., without paying a professional to assess the situation for you), it probably makes sense to do a test-run through TurboTax (or something similar) comparing each approach (selling vs. holding) for the years in question.

Interested in economics? Pick up a copy of my latest book:

Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less

Disclaimer: Your subscription to this blog does not create a CPA-client or other professional services relationship between you and Mike Piper or between you and Simple Subjects, LLC. By subscribing, you explicitly agree not to hold Mike Piper or Simple Subjects, LLC liable in any way for damages arising from decisions you make based on the information available herein. Neither Mike Piper nor Simple Subjects, LLC makes any warranty as to the accuracy of any information contained in this communication. I am not a financial or investment advisor, and the information contained herein is for informational and entertainment purposes only and does not constitute financial advice. On financial matters for which assistance is needed, I strongly urge you to meet with a professional advisor who (unlike me) has a professional relationship with you and who (again, unlike me) knows the relevant details of your situation.

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Investing Blog Roundup: 20 Years of the “4% Rule” http://www.obliviousinvestor.com/investing-blog-roundup-20-years-of-the-4-rule/ http://www.obliviousinvestor.com/investing-blog-roundup-20-years-of-the-4-rule/#comments Fri, 10 Oct 2014 12:00:44 +0000 http://www.obliviousinvestor.com/?p=7310 The retirement planning concept of “safe withdrawal rates” (and the accompanying “4% rule” concept) can be traced back to an article by financial planner Bill Bengen — an article that was published 20 years ago this month (October, 1994). This week, the Journal of Financial Planning published a piece by financial planner Jonathan Guyton (with additional perspectives from a number of other big names in the retirement planning field) discussing the impact of Bengen’s research.

Investing Articles

Thanks for reading!

Interested in economics? Pick up a copy of my latest book:

Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less

Disclaimer: Your subscription to this blog does not create a CPA-client or other professional services relationship between you and Mike Piper or between you and Simple Subjects, LLC. By subscribing, you explicitly agree not to hold Mike Piper or Simple Subjects, LLC liable in any way for damages arising from decisions you make based on the information available herein. Neither Mike Piper nor Simple Subjects, LLC makes any warranty as to the accuracy of any information contained in this communication. I am not a financial or investment advisor, and the information contained herein is for informational and entertainment purposes only and does not constitute financial advice. On financial matters for which assistance is needed, I strongly urge you to meet with a professional advisor who (unlike me) has a professional relationship with you and who (again, unlike me) knows the relevant details of your situation.

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Tax-Gain Harvesting with Bonds http://www.obliviousinvestor.com/tax-gain-harvesting-with-bonds/ http://www.obliviousinvestor.com/tax-gain-harvesting-with-bonds/#comments Mon, 06 Oct 2014 12:00:52 +0000 http://www.obliviousinvestor.com/?p=7078 Tax-loss harvesting is a very common tax strategy in which you sell a holding when its value is less than the amount you paid for it, then reinvest the proceeds from the sale in a similar (though not “substantially identical”) investment. The idea is that you then get to use the capital loss (up to $3,000 per year) to offset ordinary income on your tax return, without having to make any significant change to your portfolio.

Tax-gain harvesting is a somewhat less common strategy, as it’s generally only helpful for people in the 15% tax bracket or below. The idea is to sell a long-term holding for a gain, then reinvest the proceeds in a similar investment. The benefit comes from the fact that, if you’re in the 15% tax bracket or below, you do not have to pay any tax on the long-term capital gain, and now your cost basis in the asset has increased to the asset’s current value, thereby reducing the size of the capital gain that you might have to pay tax on in the future.

There is, however, a form of tax-gain harvesting that can be helpful even to investors who are in a tax bracket higher than 15%. It becomes relevant when you’ve held a bond for more than one year, and it is currently valued at a price higher than what you paid for it (i.e., the price has gone up because interest rates have fallen since you purchased the bond).

The idea is that, rather than holding the bond and continuing to receive payments at the bond’s higher-than-market interest rate, you sell your bond at a premium, then reinvest the proceeds in a bond that:

  • Has a similar credit quality and remaining maturity (so that you’re not changing the risk of your portfolio), yet
  • Is selling at (or very close to) its par value (e.g., because it’s a new bond).

By doing so, you essentially convert a portion of the yield that you would have received as interest into a long-term capital gain, which will be taxed at a lower rate than the interest income would have been. While it does result in having to pay the tax sooner than you otherwise would have had to (which is generally not a good thing), taking advantage of the difference in tax rates often allows you to achieve a higher after-tax return.

Interested in economics? Pick up a copy of my latest book:

Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less

Disclaimer: Your subscription to this blog does not create a CPA-client or other professional services relationship between you and Mike Piper or between you and Simple Subjects, LLC. By subscribing, you explicitly agree not to hold Mike Piper or Simple Subjects, LLC liable in any way for damages arising from decisions you make based on the information available herein. Neither Mike Piper nor Simple Subjects, LLC makes any warranty as to the accuracy of any information contained in this communication. I am not a financial or investment advisor, and the information contained herein is for informational and entertainment purposes only and does not constitute financial advice. On financial matters for which assistance is needed, I strongly urge you to meet with a professional advisor who (unlike me) has a professional relationship with you and who (again, unlike me) knows the relevant details of your situation.

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Investing Blog Roundup: Active Management Risk http://www.obliviousinvestor.com/investing-blog-roundup-active-management-risk/ http://www.obliviousinvestor.com/investing-blog-roundup-active-management-risk/#comments Fri, 03 Oct 2014 12:00:41 +0000 http://www.obliviousinvestor.com/?p=7304 The big news last week and early this week was the abrupt departure of legendary bond fund manager Bill Gross from PIMCO. (For those who don’t bother to learn the names of mutual fund managers: Bill Gross was one of founders of the company, and he ran the firm’s Total Return fund for many years with very impressive performance.)

This event is the perfect example of the “management risk” that investors in actively managed funds have to deal with. That is, investors in the fund now have to decide whether they should follow the fund manager to his new fund, stick with the fund without the legendary manager, or do something else entirely.

Jason Zweig and Allan Roth discuss the situation (and accompanying lessons to be learned) this week:

Investing Articles

Other Money-Related Articles

Thanks for reading!

Interested in economics? Pick up a copy of my latest book:

Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less

Disclaimer: Your subscription to this blog does not create a CPA-client or other professional services relationship between you and Mike Piper or between you and Simple Subjects, LLC. By subscribing, you explicitly agree not to hold Mike Piper or Simple Subjects, LLC liable in any way for damages arising from decisions you make based on the information available herein. Neither Mike Piper nor Simple Subjects, LLC makes any warranty as to the accuracy of any information contained in this communication. I am not a financial or investment advisor, and the information contained herein is for informational and entertainment purposes only and does not constitute financial advice. On financial matters for which assistance is needed, I strongly urge you to meet with a professional advisor who (unlike me) has a professional relationship with you and who (again, unlike me) knows the relevant details of your situation.

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Financial Advisor Fees Are Irrelevant, If You’ve Already Paid Them http://www.obliviousinvestor.com/financial-advisor-fees-are-irrelevant-if-youve-already-paid-them/ http://www.obliviousinvestor.com/financial-advisor-fees-are-irrelevant-if-youve-already-paid-them/#comments Mon, 29 Sep 2014 12:00:20 +0000 http://www.obliviousinvestor.com/?p=7303 A reader writes in, asking:

“After reading your books and others on the Boglehead reading list, I think I’ve determined that my new money should go to Vanguard index funds. But I’m thinking about keeping my existing savings with the advisor I’ve been using for several years. I’m less optimistic than ever about his ability to beat index funds but it seems like leaving him would mean that all the money I’ve paid in commission and fees over the years would be a waste. Does this line of thinking make sense?”

To put it bluntly, no, that line of thinking doesn’t make sense.

In economics, the commissions and fees that you’ve already paid your advisor would be referred to as “sunk costs” (i.e., costs that you’ve already paid and which cannot be recovered regardless of which action you take). For decision making purposes, sunk costs are irrelevant and should be ignored.

This concept is often best explained with an analogy. Imagine that it’s Saturday afternoon, and you just spent $9 to see this summer’s latest blockbuster movie. Twenty minutes into the movie, however, you realize that it’s simply not for you. In fact, it’s terrible. At this point, the $9 ticket price is irrelevant. Sitting through the rest of the movie doesn’t get you your $9 back. All that matters is what you want to do with the next 90 minutes of your life. If sitting through the rest of the movie isn’t the option that brings you the most happiness, you shouldn’t do it.

Commissions and fees that you’ve already paid to an advisor are like that $9 movie ticket. You’re not getting them back. So the only question that matters is which route looks best going forward.

In other words, if there is no cost to make the switch (e.g., capital gains taxes), the only thing that matters is which you expect to perform better in the future: money that you have invested with the advisor, or the Vanguard index fund portfolio that you’ve planned. If you think the index funds would perform better, there’s no sense continuing to pay more fees just because you’ve already paid some fees.

Interested in economics? Pick up a copy of my latest book:

Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less

Disclaimer: Your subscription to this blog does not create a CPA-client or other professional services relationship between you and Mike Piper or between you and Simple Subjects, LLC. By subscribing, you explicitly agree not to hold Mike Piper or Simple Subjects, LLC liable in any way for damages arising from decisions you make based on the information available herein. Neither Mike Piper nor Simple Subjects, LLC makes any warranty as to the accuracy of any information contained in this communication. I am not a financial or investment advisor, and the information contained herein is for informational and entertainment purposes only and does not constitute financial advice. On financial matters for which assistance is needed, I strongly urge you to meet with a professional advisor who (unlike me) has a professional relationship with you and who (again, unlike me) knows the relevant details of your situation.

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Investing Blog Roundup: Spending in Retirement http://www.obliviousinvestor.com/investing-blog-roundup-spending-in-retirement/ http://www.obliviousinvestor.com/investing-blog-roundup-spending-in-retirement/#comments Fri, 26 Sep 2014 12:00:52 +0000 http://www.obliviousinvestor.com/?p=7299 This week, two articles dealing with recent retirement-related research came across my radar — one discussing income, spending, and overall satisfaction in retirement, the other discussing mental health in retirement:

Investing Articles

Thanks for reading!

Interested in economics? Pick up a copy of my latest book:

Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less

Disclaimer: Your subscription to this blog does not create a CPA-client or other professional services relationship between you and Mike Piper or between you and Simple Subjects, LLC. By subscribing, you explicitly agree not to hold Mike Piper or Simple Subjects, LLC liable in any way for damages arising from decisions you make based on the information available herein. Neither Mike Piper nor Simple Subjects, LLC makes any warranty as to the accuracy of any information contained in this communication. I am not a financial or investment advisor, and the information contained herein is for informational and entertainment purposes only and does not constitute financial advice. On financial matters for which assistance is needed, I strongly urge you to meet with a professional advisor who (unlike me) has a professional relationship with you and who (again, unlike me) knows the relevant details of your situation.

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Investing Blog Roundup: Market Valuations and Retirement Asset Allocation http://www.obliviousinvestor.com/investing-blog-roundup-market-valuations-and-retirement-asset-allocation/ http://www.obliviousinvestor.com/investing-blog-roundup-market-valuations-and-retirement-asset-allocation/#comments Fri, 19 Sep 2014 12:00:04 +0000 http://www.obliviousinvestor.com/?p=7294 Housekeeping note: We have family and friends visiting from out of town this week and early next week, so there will be no article on Monday.

This week researchers Wade Pfau and Michael Kitces released a new paper looking at an assortment of different asset allocation strategies in retirement — ranging from various static allocations, to various “glide path” allocations that either increase or decrease the stock portion over time, to various valuation-based allocations that adjust the stock/bond ratio over time based on whether stock valuations are high or low.

The paper and the authors’ respective summary articles can be found here:

If I were to offer my own very brief summary, it would be as follows:

  • Based on historical US data, adjusting asset allocation based on market valuations has modestly improved results for retirement portfolios, and
  • A fixed 60%-stock allocation is pretty darned good as well.

Investing Articles

Thanks for reading!

Interested in economics? Pick up a copy of my latest book:

Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less

Disclaimer: Your subscription to this blog does not create a CPA-client or other professional services relationship between you and Mike Piper or between you and Simple Subjects, LLC. By subscribing, you explicitly agree not to hold Mike Piper or Simple Subjects, LLC liable in any way for damages arising from decisions you make based on the information available herein. Neither Mike Piper nor Simple Subjects, LLC makes any warranty as to the accuracy of any information contained in this communication. I am not a financial or investment advisor, and the information contained herein is for informational and entertainment purposes only and does not constitute financial advice. On financial matters for which assistance is needed, I strongly urge you to meet with a professional advisor who (unlike me) has a professional relationship with you and who (again, unlike me) knows the relevant details of your situation.

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A Look at Vanguard’s Managed Payout Fund http://www.obliviousinvestor.com/a-look-at-vanguards-managed-payout-fund/ http://www.obliviousinvestor.com/a-look-at-vanguards-managed-payout-fund/#comments Mon, 15 Sep 2014 12:00:00 +0000 http://www.obliviousinvestor.com/?p=7295 A reader recently wrote in asking for a discussion of the Vanguard Managed Payout Fund — how it works and what it might be good for.

In short, the fund is meant to be a tool for investors who are spending from their portfolios (i.e., retirees). It’s an all-in-one fund (like the LifeStrategy or Target Retirement funds), but it also implements a withdrawal strategy for you. In other words, the fund handles not only asset allocation and rebalancing, but also the implementation of a distribution strategy. Pretty neat idea, in my opinion.

What is the Distribution Strategy?

Perhaps the best way to assess the Managed Payout Fund’s distribution strategy is to compare it to other strategies.

The best known retirement distribution strategy is the classic “4% rule,” in which the retiree spends 4% of the portfolio balance in the first year of retirement, then automatically adjusts spending upward each year in keeping with inflation, regardless of how the portfolio performs. The advantage of this strategy is a steady level of spending (in inflation-adjusted terms), with the disadvantage being that someday the portfolio (and, therefore, the spending) could hit zero if things go poorly.

An alternative, equally simple strategy is to take 4% out of the portfolio each and every year. Relative to the classic “4rule,” this results in widely varying levels of spending (which is undesirable), but it has the advantage of never fully depleting the portfolio.

The strategy of the Vanguard Managed Payout Fund sits between these two — with a level of spending that does vary based on portfolio performance, but that is “smoothed” by basing the withdrawal on the average share price over multiple years. (Specifically, the fund sets a monthly distribution in January of each year, based on 4% of the fund’s average share price over the last three years.)

Vanguard Managed Payout Asset Allocation

As of this writing, the Managed Payout Fund’s allocation is as follows:

  • Vanguard Total Stock Market Index Fund 25.0%,
  • Vanguard Global Minimum Volatility Fund 20.1%,
  • Vanguard Total International Stock Index Fund 14.9%,
  • Vanguard Total Bond Market II Index Fund Investor Shares 13.3%,
  • Vanguard Market Neutral Fund Investor Shares 10.0%,
  • Vanguard Total International Bond Index Fund 6.9%,
  • Vanguard Emerging Markets Stock Index Fund Investor Shares 5.1%, and
  • Commodities 4.7%.

Frankly, I’m not exactly a fan of this allocation. I’m not talking here about the stock/bond allocation (though with a net** stock allocation of roughly 65%, it is rather aggressive for many retirees) or the US/international allocation. I’m talking about the fact that roughly one third of the portfolio is actively managed. If I were to bet on active management, it would be Vanguard’s that I’d want to bet on, given their low costs and strong track record. But I’d rather have the option to use this sort of all-in-one tool without having to make such a bet.

Conclusion

In short, Vanguard’s Managed Payout Fund might be a good fit for investors who:

  • Are retired and drawing from their portfolios,
  • Appreciate the simplicity of an all-in-one fund and an automated distribution strategy,
  • Don’t have any qualms about active management, and
  • Find that the fund’s allocation is a good fit for their risk tolerance.

In addition, like all funds-of-funds, this fund will be less tax-efficient than a DIY portfolio with individual index funds, making it somewhat less desirable for investors with significant assets in taxable accounts.

** I say “net” stock allocation because the Market Neutral Fund shouldn’t, in theory, be contributing any stock market volatility.

Interested in economics? Pick up a copy of my latest book:

Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less

Disclaimer: Your subscription to this blog does not create a CPA-client or other professional services relationship between you and Mike Piper or between you and Simple Subjects, LLC. By subscribing, you explicitly agree not to hold Mike Piper or Simple Subjects, LLC liable in any way for damages arising from decisions you make based on the information available herein. Neither Mike Piper nor Simple Subjects, LLC makes any warranty as to the accuracy of any information contained in this communication. I am not a financial or investment advisor, and the information contained herein is for informational and entertainment purposes only and does not constitute financial advice. On financial matters for which assistance is needed, I strongly urge you to meet with a professional advisor who (unlike me) has a professional relationship with you and who (again, unlike me) knows the relevant details of your situation.

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