Follow Buffett’s Lead and Focus on Value + Quality

Investors might be surprised to know that Warren Buffett, perhaps the greatest investor of all time, is a big fan of indexing. For instance, “He has already declared that 90 percent of the money he leaves to his wife will be invested in Vanguard’s S&P 500 index fund.” But as Nir Kaissar, a Bloomberg Gadfly columnist points out, investors can glean insight into Buffett’s high quality and value portfolio at Berkshire. For example, the chart below shows that the stocks owned by Buffett trade at lower market multiple’s than the S&P and have a higher return-on-equity. Kaissar writes, “the magic […]

Assets Flying out of Actively Managed Funds

Christine Benz and Russ Kinnel of Morningstar discuss the wave of assets moving out of actively managed funds and into passive index funds. According to Kinnel, of the Morningstar 500 (generally the largest, most well-known 500 mutual funds), 17 those funds saw assets fall by 50% or more over the last 12 months. The flight of assets out from actively managed funds is not a solely a function of relative underperformance either says Kinnel, and the outflows signal a broader trend of investors having less of an appetite for higher fee products. Kinnel explains that outflows can be very problematic […]