Vanguard change coming I received this email from Vanguard yesterday concerning the conversion of my S&P index investor class taxable account with Vanguard (I submitted my request for the conversion):
Our index funds changed investing forever. Now we’re making them even better.
Fund newsNovember 19, 2018
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If you’re like many successful investors, you like to keep it simple. That means saving consistently in low-cost, straightforward investments like index funds. We get it. We pioneered index investing for individuals. Simplicity, transparency, and low fees are core to who we are. And we’re constantly looking for ways to build on those values.
That’s why we’re making a change.
We’re lowering costs for more than 1 million current index fund investors and giving new investors one more reason to choose Vanguard. To do that, we’re dropping the minimum investment for Admiral™ Shares on 38 index funds.
Our Admiral Shares were previously available to investors with over $10,000 per fund. Now you’ll only need $3,000 to take advantage of the low expense ratios Admiral Shares offer. In turn, we’re eliminating higher-cost Investor Shares of those same index funds for individual investors.*
What this means for you
Whether you’re just starting out, adding to your portfolio, or catching up, this change can help you:
Reach your goals faster. Lower expense ratios mean more of your returns stay in your account, so it can grow faster. For example, $50,000 invested in Investor Shares might cost an average of $90 per year versus $55 per year in Admiral Shares. A $35 difference might not sound like much. But when it’s compounded over 10 years, it can add over $600 to your bottom line.**
Diversify your portfolio. When choosing how to allocate your money, you’ll have more flexibility to diversify. For example, if you have $10,000 to invest, you can still put it in a single index fund. Or you can split it up into 3 different index funds and get the same low-cost benefits.
If you currently own Investor Shares of any affected funds, you don’t have to do anything. We’ll convert them to Admiral Shares over the next year. Or you can immediately and easily convert your shares using our online process.
Already own Admiral Shares? The change doesn’t affect your current investments. But if you choose to purchase a new fund in the future, you don’t need $10,000 to get the same low expense ratio you’re used to. And you can be sure we’ll continue to look for the best ways to lower costs and help you meet your investment goals.
On a mission to give investors the best chance for success
Vanguard’s story begins with low costs but it doesn’t end there. Vanguard is built for investors. As a client-owned† firm, everything we do is because we care about our clients, want them to succeed, and have no competing loyalties.
This change is one more way we’re looking out for investors. It will allow us to deliver an estimated $71.2 million in savings to clients.††
“No other firm in the industry has demonstrated Vanguard’s track record of delivering cost savings and value to its clients,” said Vanguard CEO Tim Buckley. “Our unique, client-owned structure enables us to consistently pass along economies of scale and lower the cost of investing for our clients, so they keep more of their returns.”
See which index funds now offer $3,000 minimum investments for Admiral Shares
*Investor Shares will still be used in certain situations, such as in retirement plans and fund-of-funds investments.
**Vanguard Investor Shares average expense ratio: 0.18%. Vanguard Admiral Shares average expense ratio: 0.11%. All averages are asset-weighted. Source: Vanguard, as of December 31, 2017. This hypothetical example assumes a $50,000 investment held for 10 years, with an average return of 6%. It doesn’t represent any particular investment. Your actual savings could be higher or lower. The rate is not guaranteed.
†Vanguard is client-owned. As a client-owner, you own the funds that own Vanguard.
††Estimated savings for the identified funds is the difference between the Investor and Admiral expense ratios multiplied by eligible average assets under management (AUM). Eligible average AUM is based on the daily average assets over the past 12 months (November 2017 to October 2018).
Lewis Braham: If Commodities’ Day Has Come, This Fund Should Score: (JCRAX) FYI: Lately, commodities have performed so poorly investors would be forgiven for thinking people no longer need anything to eat, drink, or fuel their cars—just iPhones and subscriptions to Amazon Prime. In the past five years, the average commodity mutual fund has lost 8% a year, while the S&P
500 has gained 10%.
Worse, even when commodity prices have gone up, most commodity funds have failed to fully capture those gains. A phenomenon known as “contango” has been a drag on fund performance. Investors rarely buy commodities directly, instead favoring futures contracts, which are derivatives with expiration dates. Contango occurs when a commodity future’s price is above the current or spot price, so that every time a contract expires, investors must pay more for a new one.
Regards,
Ted
https://www.barrons.com/articles/if-commodities-day-has-come-this-fund-should-be-a-winner-1543496400?refsec=fundsM* Snapshot JCRAX:
https://www.morningstar.com/funds/XNAS/JCRAX/quote.htmlLipper Snapshot JCRAX:
https://www.marketwatch.com/investing/fund/jcraxJCRAX Is Unranked In The (CBB) Fund Category By U.S. News & World Report:
https://www.marketwatch.com/investing/fund/jcrax
Bogle Sounds A Warning On Index Funds FYI: There no longer can be any doubt that the creation of the first index mutual fund was the most successful innovation—especially for investors—in modern financial history. The question we need to ask ourselves now is: What happens if it becomes too successful for its own good?
The First Index Investment Trust, which tracks the returns of the S&P
500 and is now known as the Vanguard
500 Index Fund, was founded on December 31, 197
5. It was the first “product,” as it were, of a new mutual fund manager, The Vanguard Group, the company I had founded only one year earlier.
Regards,
Ted
https://www.wsj.com/articles/bogle-sounds-a-warning-on-index-funds-1543504551
Rob Arnott: Sell U.S. Tech Stocks, Buy Emerging Markets: (PAUAX)
A Significant Correction In Equities To Wake Investors Up To The Benefits Of Fixed Income
Sweep Accounts: Something most brokerage firms would rather you ignore "Most brokerage firms have found a subtle way to squeeze money out of their customers. The trick: switching their sweep accounts from higher-yielding money market mutual funds to lower-yielding bank accounts."Kathleen Pender has
an interesting article in the San Francisco Chronicle on yet another way many brokerages have found to short-change you.
AQR’s Cliff Asness Loses His Cool How can a strategy said to be market neutral plunge 13-15% YTD?
It’s been an especially rocky and nasty year for most hedge-type funds. In fact, they haven’t done well for many years. And the big hedge funds have experienced huge outflows this year. I don’t pretend to understand it. But there might be more at work here than simply “stupid managers.” High fees for sure. But, possibly, “insane” markets as well based on unsustainable increases in a few large indexes (ie -
the elephant chasing his tail).
-
Edit: A couple added late-night thoughts:
- Some hedge funds (including so called
market neutral funds) may be betting on an eventual break in the unusually strong Dollar. This might involve holding gold or EM bonds - both of which have slumped sharply since the beginning of the year (explaining some of their dismal showing). The reasoning behind this is that the Fed will “blink” after U.S. equity markets have turned down and stop raising rates. I think they’re right in that assumption - but it’s hard to say when that will happen. BTW - Ray Dalio of Bridgewater is one hedge fund manager who is hedging with gold.
- I think the term
hedge fund as a style makes more sense than
market neutral. If you want a truly “market neutral” approach - go 100% cash. Excepting that extreme, don’t know how you can remain truly neutral.
M*: Why We Don't Recommend This 5-Star Bond Fund: (GIBIX)
AQR’s Cliff Asness Loses His Cool They were great in the 2015-16 downturn in everything else, but bad news this time around.
Forget Asness, and onward through the fog.
AQR’s Cliff Asness Loses His Cool Agree with
@VF. How can a strategy said to be market neutral plunge 13-1
5% YTD?
Bespoke: Country Stock Markets As A Percent Of World: U.S. 39.81% - Japan 7.76% - China 7.54% FYI: Below is a look at the percentage of total world stock market cap that each country’s stock market makes up. For each country, we show its percentage of world market cap as of today, as it stood on 9/20 when the S&P
500 made its last all-time high, as it stood on election day 2016, and as it stood 10 years ago.
The US currently makes up 39.81% of world stock market cap, which is more than 30 percentage points more than the next closest country — Japan — at 7.76%.
Note that Japan has moved into second place after being well behind China in November 2016. While the US has gained more than 3 percentage points of global market cap share since Trump was elected, China has lost a significant amount — falling from 10.21% down to 7.
54%. At least based on this measure, Trump’s trade fight with China has benefited the US at the expense of China.
Hong Kong remarkably makes up 6.7
5% of world stock market cap, which is well ahead of the UK (4.41%), France (3.14%), Germany (2.83%), and Canada (2.74%).
Since the 9/20 peak for the S&P
500, the US has lost 0.49 percentage points of share, while China, Hong Kong, and Brazil have seen the biggest gains, so things have tightened a little bit between the US and China during the recent sell-off here in the US.
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/country-stock-markets-as-a-percent-of-world/
MFO Website @ 09:51 PST- Fine here also.
Royce International Discovery Fund to liquidate Royce funds have been a train wreck the past few years.
The fund thats closing ROIMX has attracted just 6.5 million dollars of assets in its 8 year existence , And is down 18.6% YTD.
Matter of fact, 16 of the 17 Royce Mutual Funds are down YTD.
JPMorgan's $50 Billion Fund Looks For Shelter In Junk Bonds FYI: One of J.P. Morgan Asset Management’s largest mutual funds is betting junk bonds will help shelter it from the trade war.
The firm’s $49.6 billion Global Income Fund has slashed its equities exposure to 31 percent at the end of October from 43 percent at the beginning of the year and put part of the proceeds into U.S. and European high-yield debt, according to co-manager Eric Bernbaum. The fund cut its stock holdings before the October sell-off, and turned to junk bonds where low default rates, declining leverage and strong fundamentals abound, he said.
Regards,
Ted
M* U.K.: Snapshot Of Fund:
http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F000002HFH
Tracking Bruce Berkowitz's Fairholme Portfolio - Q3 2018 Update
Somebody Ate My Fund @BenWPhttps://www.sec.gov/Archives/edgar/data/836487/000110465918063356/a18-36104_17497.htm497 1 a18-36104_17497.htm 497
Summary Prospectus and
Prospectus Supplement
October 22, 2018
Morgan Stanley Institutional Fund, Inc.
Supplement dated October 22, 2018 to the Morgan Stanley Institutional Fund, Inc. Summary Prospectuses and Prospectuses dated April 30, 2018
Global Discovery Portfolio
Global Insight Portfolio
(each, a "Fund")
On October 17, 2018, stockholders of each Fund approved an Agreement and Plan of Reorganization by and between each Fund and Morgan Stanley Institutional Fund, Inc., on behalf of its series Global Advantage Portfolio ("MSIF Global Advantage"), pursuant to which substantially all of the assets and liabilities of each Fund would be transferred to MSIF Global Advantage and stockholders of each Fund would become stockholders of MSIF Global Advantage, receiving shares of common stock of MSIF Global Advantage equal to the value of their holdings in each Fund (the "Reorganizations"). Each stockholder of each Fund will receive the Class of shares of MSIF Global Advantage that corresponds to the Class of shares of each Fund currently held by that stockholder. It is anticipated that the Reorganizations will be consummated on or about November 19, 2018. The Funds expects to cease offering shares of all Classes of the Funds at the close of business on or about November 14, 2018.
Please retain this supplement for future reference.
IFIGDGIREORGSUMPROSPT 10/18
Somebody Ate My Fund As of November 20, my TDA Roth account no longer holds MGDPX, but it has MIGPX. They are both global funds and have the same managers, but I did not want another LCG global when I first bought. Still waiting for an explanation of this notation in my transactions record for 11/20: " MANDATORY - EXCHANGE." Morgan Stanley's web site offers no help. I can't find updated pricing for MGDPX anywhere. The fund did make its hefty distributions on 11/15. I remain mystified.
Royce International Discovery Fund to liquidate https://www.sec.gov/Archives/edgar/data/709364/000094937718000265/trf-rmi497.htm497 1 trf-rmi497.htm
The Royce Fund
Supplement to the Investment, Service, and Institutional Class Shares Prospectus Dated May 1, 2018
Royce International Discovery Fund
The Royce Fund’s Board of Trustees approved a plan of liquidation for Royce International Discovery Fund, to be effective on December 28, 2018. The Fund is being liquidated primarily because it has not attracted and maintained assets at a sufficient level for it to be viable. As of November 1, 2018, the Fund was no longer offering its shares for purchase and was not accepting any investments.
November 27, 2018
RMI-SUPP-CLOSE
Analyst Who Nailed 2018 Has Same S&P 500 Forecast For Next Year @Ted, I'll bet you our local fare, the culinary masterpiece - Rochester's famous Garbage Plate versus a Chicago-style pizza, that the S&P
500 will be closer to 2600 than 3000 by year end :)
All Dodge & Cox Funds Trending Down I think we're in agreement here. If one buys a "go anywhere" international fund that really does go anywhere, then one is delegating regional allocations. Then one should simply benchmark against a global ex-US index and not complain about the world regions it wanders into.
However, that's not the way many funds function. IMHO, the difference between a traditional balanced (60/40) fund and a moderate "allocation" fund is that the latter has a little more wiggle room to make tactical shifts. But it's still going to be meandering near that 60/40 "set point", and so should be benchmarked that way.
Likewise, if one picks an international fund that holds around 1/5 in EM, then one should keep that in mind when fleshing out one's portfolio. So long as the fund doesn't lose big relative to its set point allocation, then as you wrote, "that's fine".
