Peter Lynch Protégé Says “Stocks are Fine Today”

Jeff Vinik, who ran Fidelity’s famed Magellan Fund from 1992 until before he left the firm in 1996, became well known for his aggressive investing style, according to a recent Barron’s article. A huge sports fan, in 2010 he left the money management business, bought the Tampa Bay Lightning (a then floundering hockey team) and has undertaken a $3 billion revitalization of downtown Tampa. Here are some highlights from the Barron’s interview: “Stocks are fine today,” says Vinik. While valuations are stretched, he argues that this is primarily due to low interest rates. “We are dealing with some of the […]

Shift to Passive Investing May Not Influence Stocks Like Some Think

By Jack M. Forehand —  The massive move investors have made to passive vehicles over the past few years has been truly astounding. With most active managers underperforming their benchmarks by a wide margin recently and over longer periods of time, and charging higher fees to do it, investors have been moving their money out of active and into passive in droves. A CNBC article in April sums up the magnitude of the move: “Flows out of actively managed U.S. equity mutual funds leaped to $264.5 billion in 2016, while flows into passive index funds and ETFs were $236.1 billion, […]

Zweig on the Impact of Index Funds

Last month marked the fortieth birthday of the first index fund (launched by John Bogle, founder of the Vanguard Group) and the anniversary has triggered a lot of discussion and reflection on the trajectory this class of funds has traveled since. Jason Zweig of the Wall Street Journal shares some thoughts on the subject and how the phrase “too much of a good thing” could apply. Zweig reports that over the past year $409 billion has flowed into index funds, a class of funds that “slash the costs of investing by 90% or more by skipping most of the research […]

Are Index Funds Passive Aggressive?

“The index provider is becoming more of a stock picker,” said Rodney Comegys, head of investments for Asia Pacific at Vanguard Group (which oversees more than $3 trillion in primarily passive funds). “In some ways,” he says, “they’re replacing the active manager.” In a WealthManagement.com article from earlier this month, Bloomberg’s Andrea Tan delved into the surging presence of index funds. The article characterizes New York-based index compiler MSCI and others (including FTSE Russell and S&P Dow Jones) as becoming “the most important arbiters of where the world’s stock investment flows.” The power of these indices is underscored by the […]

Indexing Continues to Put the Smackdown on many Active Fund Managers

Bloomberg reports on a recent study by S&P Dow Jones Indices that found most active managers underperformed the relevant S&P benchmarks. Specifically, 66% of large-cap, 57% of mid-cap, and 72% of small-cap managers underperformed the S&P benchmarks for their categories last year. Further, over five years, 84% of large-cap managers underperformed, while 82% underperformed over the last 10 years. However, a majority of actively managed funds investing in international and developed markets outperformed their benchmarks. The article also notes that “actively run U.S. equity funds suffered outflows of $174 billion,” according to Morningstar, while Vanguard (known for index funds) “attracted […]