Tuesday, January 03, 2017

mutual fund, fund

  • 共同基金是為了希望擁有股票, 卻不想為細節煩心的人發明的
  • 適合此種人: (1) 沒有時間, 也不想在股票市場耗費心神的人, (2) 資金不多, 希望分散投資的人
  • buy over different funds from major, respected fund companies: T. Rowe Price, Franklin Templeton, Fidelity, Vanguard
  • don't over focus on trying to pick the best funds: it is quite difficult to anticipate which funds will do the best. instead, spend more time on getting the overall mix of asset classes right
  • spread purchases out over a decade or more
  • broadly diversify across respectable fund management firms
  • broadly spread out over a lot of funds and a lot of asset classes (gold, government bonds, municipal bonds, corporte bonds, stocks, funds, international equities, etc), and spread out over a number of years
  • http://timmccarthy.com/
  • buy a broad group of reputable funds covering most all asset classes slowly over a period of tiem and then leaving them alone
  • morningstar, lipper, marketwatch-- provide relative effectiveness of various funds, but can't give u the full answer
  • http://timmccarthy.com/
  • after 10 years, on average, at least half of ur funds will be shut down; funds seldom if ever shut down for positive reasons for investors
  • u should sell a fund in ur portfolio if it is a likely candidate for the fund to close in the near future, such signals for funds at risk includes: (1) fund performance is extremely negative, or substantially worse than their peers, (2)asset class is no longer sexy, (3) fund company is in reorganization and looking to merge either themselves or their funds, (4) fund manager or team retires, or leave the firm suddenly, (5) fund size is small, e.g, depending on the asset class, under $ 60 million could be a concern
  • mix up ur funds cross a variety of funds and even fund companies as it decreases ur overall risk, thus, if any one fund or fund company's performance deteriorates, it won't have a materials effect on ur overall portfolio
  • by buying some funds that have risk exposure to inflation while buying other funds that have risk exposure to deflation, u have balanced them out and thus deceased each risk in total
  • don't have most of ur money invested in countries where the proportion of the population entering retirement age is increasing
  • check whether u are over concentrated in stocks that are negatively affected by the price of oil or other commodities?
  • u want some exposure to commodities, just to decrease the risk in case commodities shoot up in value, but u should keep u commodities exposure a minority of ur total portfolio 
  • what are the major industries of sectors u are exposed to across all ur funds? are u too exposed to the tech sector or financial sector in ur portfolio. It is especially dangerous if ur profession and all ur stock options from ur employer are in the same sector
  • short-term funds: in order to give u higher yields, some fund companies purchase higher credit risk instruments to sweeten the yield of their funds; these products can contain even more risk than buying speculative stocks, yet u may not be receiving enough return for ur risk
  • public mutual funds, in USA "40 Act Funds" derived from Investment Company Act of 1940
  • u can place the order buy or sell at any time, u will receive a price calculated overnight based on the prices of the underlying securities at the close of the markets at the end of the corresponding trading day--so called forward pricing
  • in UK, Hong Kong, Singapore, Australia, New Zealand --- mutual fund is called "unit trust"
  • in Europe, the SICAVs and UCITs funds
  • check the amount of hidden tax potential liability that can lie within the fund--- if fund drops suddenly in value right after u buy, and then there are substantial redemptions resulting before the next tax reporting period. The result is that u literally can lose money in the value of the fund and also have to pay taxes due on the fund if high redemptions occur
the stocks in a mutual fund generally break down into three broad styles:
1. growth stock: shares of companies whose earnings (profits) and revenues are growing fast
2. value stock:

  • their share price is believed to be lower than the true value of the company, they are basically an unloved stock 
  • sometimes due to the company hit a rough patch, or just because the market sour on the industry
  • value investors use patience to their advantages, they look at the fundamentals of the company, if they feel the stock price is wrongly "undervalued", they will buy and then hold on to it until others in the market take notice that the stock is undervalued and start to buy it
3.blend fund-- mutual funds that own stocks that share both growth and value characteristics are called blend funds

each mutual fund typically concentrate on stocks that fall into one of three size categories:
1. small-cap fund
  • own stocks of smaller companies, these are newer, fast-growing firms
  • small-cap can offer a great chance of big gains if the company continue to grow
  • risk--it will hit turbulence as it tries to grow into a more mature firm
2. mid-cap fund
  • companies are still in their faster-growth stage, but have more stability then small-caps
  • many people think mid-cap stocks offer the best of all worlds
3.large-cap fund
  • least risky, these firms are big, established multinational companies that are entrenched in their industries

how often should u buy funds
  • the lowest risk approach is to buy a little each month
  • make new investments every quarters, or once or twice a year
  • in one quarter, u can buy a domestic index fund, then the next quarter u can buy an international actively managed funds, and the the third quarter u can buy a medium-term international bond fund
  • build up the exposures to all the asset classes relatively evenly
  • automatic reinvestment of ur dividends and interest income
  • most experts are unable to know the right time to buy/sell; it is especially true when deciding when to get into the markets
  • u are simply better off to continue to trickle in and not worry about the timing
  • ur average or normal holding period for ur funds would be mostly 5 to 15 years
stock mutual fund (股票型基金)
  • a stock mutual fund is a fund that owns dozens, if not hundreds, of individual stocks
  • a mutual fund give u instant diversification-- u buy shares of a mutual fund, and each share gives u a stake in all the different stocks owned by the fund
  • own many different stocks that are in different types of industries or services -- diversification
  • the majority of ur money should be in the mutual funds of ur 401 (k) plan, even if ur plan offers u shares of ur company's stock, u still should make mutual funds the centerpiece of ur 401 (k) fund, loading up on ur company stock will leave ur undiversified
  • u decide when to buy or sell a stock
  • with a mutual fund, a portfolio manager decides what stocks to buy and sell for the fund, the portfolio manager controls the decision making about what investments to hold inside that fund
  • 若你是長期投資人, 不要理會債券型基金與綜合型基金(同時投資股票和債券的基金), 直接找純粹的股票型基金
  • 你可以直接從股票市場購買上市公司的股票, 或以購買股票型基金的方式投資某公司
  • 股票型基金可以讓你將投入的金額分散投入在幾個不同的上市公司
  • 股票型基金通常都有基金管理人, 由他來決定將旗下的基金投注於哪間企業, 何時進場, 何時賣出
  • 挑選年度報酬率高的基金, 並確定創造優異記錄的經理人是否還繼續管理這檔基金
  • 長期而言, 投資小型股的獲利會超過投資大型股, 今天成功的小型公司會變成未來的walmart, microsoft, 故投資小型公司的小型股基金, 績效遠高於大型股基金; 小型意指總市值, 即流通在外股數乘以目前股價得到的數字; 小型股基金只要找到幾家像walmart 一樣的好公司, 就可輕鬆地打敗對手; 小型股的波動通常比大型股激烈, 故和其他類型的基金相比, 小型基金會讓你碰到更多的極端起伏, 宜牢牢坐著
  • 宜投資歷史悠久, 始終表現極為優異績效的基金, 莫冒險選新基金
  • bond and stable-value (mutual) fund don't have as much upside potential as stock
  • if u are 20, 30, 40 years from retirement, u should focus on stock funds
  • mutual fund trading is different from stock trading. stock traded on a stock exchange, during the day, u can buy and sell shares, stock price is whatever the stock was trading at when your order was placed
  • mutual funds don't trade during the day, their price is set just once a day after the market closes, which is 4 pm EDT Monday to  Friday ; e.g., u buy or sell ur fund shares at 11 AM, u go online or call customer service and place ur order at 11 am. the actual price u will get on ur mutual fund trade will be based on the closing value of all the stocks in the portfolio. so u essentially have to wait until the mutual fund sets its price after the 4 PM close to know what price you will get
  • Barron's 和 Forbes 之類的財經雜誌, 會列出表, 說明哪些基金多年來績效一直高高在上
  • Barron's 每年會刊出兩次完整的基金總檢討, 細節由 Lipper Analytical提供, 由Michael Lipper經營的優質研究公司
  • The Wall Street Journal‎ 每年也刊出類似的總檢討4次
  • 若你需要某一檔基金更多資訊, 可找http://www.morningstar.com/ , 其追蹤幾千檔基金, 每個月發布一次報告
  • 經常換基金沒有好處, 某一年底排名最高的基金, 隔年很少再度創造同樣優異的績效, 挑選一檔長期紀錄完美的基金, 緊緊抱著, 結果會比較好
  • 有些基金會收手續費, 近手手續費平均3%至4%, 這表示若你投資收取手續費的基金時, 資金立刻減少3%至4%
  • 很多基金不收手續費, 不收手續費者的基金表示和收手續費者差不多, 故收手續費者未必比較好
  • 你把基金抱得越久, 手續費會變得越不重要, 若基金表現優異的話
  • 年度費用應注意, 應選儘量把年度費用壓低到1%的基金
  • 聘請基金經理中的目的是要打敗大盤指數,但基金經理經常無法打敗大盤指數, 因為打敗大盤很難, 有些乃購買指數型基金, 因其無論如何, 都保証能媲美大盤績效, 指數型基金不需要經理人

指數型基金 (index mutual fund, index fund) ---以市場股票指數(index, tracker)為標的之基金
  • 聘請基金經理中的目的是要打敗大盤指數,但基金經理經常無法打敗大盤指數, 因為打敗大盤很難, 有些乃購買指數型基金, 因其無論如何, 都保証能媲美大盤績效, 指數型基金不需要經理人
  • 常見的指數型基金---道瓊一百, 道瓊指數, 標準普爾五百 (包含500檔成分股), 德國 DAX 指數基金
  • S and P 500 是著名及不錯的股價指數--- 大型公司
  • 若你決定投資小型股基金, 希望得到小型公司巨大的潛在報酬, 你可以買追蹤小型股指數, 如 Russell 2000 index fund, 這樣你的錢會平均分散到Russell index 的2000 檔股票上
  • 另一種投資可能性: 將一部分錢投資在S and P 500, 得到大型公司的好處, 剩下的錢投資小型股指數型基金, 得到小型公司帶來的好處, 這樣你永遠不必再看怎麼挑選好基金的文章, 最後你的表現會超過非常小心研究才投資基金, 結果基金卻無法打敗大盤的一部分人
  • 若專注在指數型基金, 就可避免自己的錢被不盡責的股票型基金經理人玩弄於股掌之間
  • 多數的股票型基金經理人之績效, 並不比股票指數(指數型基金)的績效好
  • 可省下交易手續費及基金管理費
  • 不必聘請經理人, 沒有管理費, 沒有買賣不同股票的手續費, 也不需要做決定
  • 若股票市場經歷的是一次大多頭, 則指數型基金的表現會遠比股票型基金佳; 若市場水溫不定, 則二者的表現不會差太多
  • index investing attempts to replicate the performance of a given index of stocks or some other asset class; Since an index fund owns all of the investments in the underlying index, there is no picking of winners and losers; as a result, it involves much less work in managing an index fund, leading to lower costs for the investor.
  • rather than an active fund manager carefully selecting which stocks to buy and sell, index fund managwment company merely buys either all or a representative sample of the stocks in a particular market, and weights them according to their relative value in the market according to their chosen benchmark or index; thus, u are assured of bign able to participate in the growth of the market, but have little chance to outperform or underperform the market
  • the typical index funds track quite closely to the overall market index they are replicating
  • index fund operating costs are low, transaction activity is quite low, so u will not generate a lot of trading expenses in a fund
  • the management fees are typically half or more in index funds, as the management company doesn't have to pay for expensive fund managers
  • several major stock market indices are weighted and thus perform similarly to a momentum growth blue chip stock picker's style, meaning the largest stocks in the marketplace have the largest percentage in ur portfolio; so if a major company's stock has a high P/E ratio, and is in a high-growth situation, this stock could be weighted more heavily in ur selected index fund
  • Today, index funds and index ETF cover virtually all teh major asset classes
  • ny fund with the name "index" of "500" or "total market" or "extended market" in the name, these fund are index fund
  • instead of being run by a manager or a team of money managers who are responsible for deciding what stocks the fund will own (stock mutual fund), an index fund removes the human element
  • u are not investing in the ability of a money manager to be a market guru who makes great calls on what to own and what to sell
  • u are investing in a fund that simply aims to mimic the performance of a popular market benchmark, one of the most well-known market indexes is the Standard & Poor's 500, this index is made up 500 different stocks of well-known companies---what are referred to as the "blue chip"
  • better option --- an index fund that tracks an even broader index, funds that have "extended" or "total" in their name tend to track indexes of 4,500 or more stocks; not 500 stocks, but 4,500 stocks; instead of blue chips, u own a broader array of different types of stocks --- blue chips and smaller firms. 
  • A 500-index fund gives u very good diversification; an extended or total index gives u great diversification
  • indexing is a great way to go
  • very few money managers who "actively run" mutual fund (ie., they get to pick and choose the stocks in their fund), have been able to do better than the benchmarks year after year; relying on an index fund can often produce better returns over the years than relying on money managers
  • index fund is better than stock mutual fund
  • http://greenhornfinancefootnote.blogspot.tw/2017/01/the-index-mutual-funds-40-years-of.html (指數型基金40年分析)
  • Buffett: 若你不是職業投資者, 若你的目標不是超過大多數人的表現, 則你需要作到最大可能的投資多元化, 而不是不斷地買進賣出----可選擇管理成本很低的指數類共同基金 (用電腦模型來類比股票指數,如道瓊指數,納期達克指數,所包含的股票,權重和走勢;投資者可將指數型基金當成普通股票來投資)。一旦你進入對企業做評估的領域,下定決心要花時間, 花精力把事情做好, 則不應投資多元化, Buffett 所看好的生意中, 他只擁有一半左右, 投資做得不錯的人, 都沒有多元化其投資
  • disadvantages of index funds: some attractive asset classes lack a developed, liquid index; only active fund managers can ensure a more accurate exposure to these attractive asset classes; risk lies with the less liquid ETF and those ETF that employ leverage, particularly in markets where the underlying liquidity could dry up quickly. When u buy ETFs in some narrowly traded emerging markets, a significant gap could happen quickly between the price and liquidity of the ETF and the price of the underlying stocks; thus, in some low liquidity, high volatility markets, an open end actively managed mutual fund may be a better or safer way to obtain the exposure u desire
  • choose index funds of the right size, not too small, not too large
  • small index funds and ETFs do run the risk of beign shut down in the near future
  • buy index funds from investment companies that are among the larger firms managing indices--experience in the entire process of running index funds can result in lower costs and safer operations

international index fund vs. emerging market fund
  • look for a fund that invests in "international stocks", not investing in "emerging market"
  • emerging market fund invest in stocks in countries that are considered less mature or developed--this can mean tremendous opportunities, but plenty of risk, too
  • given we live in a global market, international fund primarily invests in foreign companies centered in countries that are considered more established
exchange-traded fund (ETF) 
  • in reponse to investors demanding more current income return while not wanting more equitites exposure, leveraged exchange traded funds (ETF), exchange traded notes (ETNs) are created, these are normally only for sophisticated investors
  • ETF is a great choice
  • ETF is very similar to index fund, it also aims to mimic the performance of a bench-market index, just like a regular index mutual fund
  • ETF traded like a stock on a bona fide public exchange such as NYSE
  • u can often find an ETF and an index mutual fund that are tracking the same exact benchmark, they just have a few small difference 
  • ETF becomes popular because they are easy to trade and normally reflect the exposure to a particular market they are replicating; since they trade like a stock, the transaction costs are often minimal, the ongoing management fees have been fixed to a low level to attract customers
  • when evaluating ETFs, stay away  from the smallest, the largest funds,and ETF management companies
  • Liquidity of the ETF, i.e., how large is the daily trading volume, is important if u want to sell; the more liquidity the better if u want to sell all of ur position quickly
  • ETF trade like a stock on a stock exchange, during the day, u can buy and sell shares of ur ETF and ur price is whatever the ETF was trading at when your order was places; a mutual fund is a bit different. mutual funds don't trade during the day, their price is set just once a day after the market closes, which is 4 pm EDT Monday to  Friday (see mutual fund above for more details)
  • ETF offers more liquidity than mutual fund, ETF's price changes throughout the trading day based on what is happening to the underlying stocks it owns
  • ETF cost u less in annual fee
  • a good ETF often have a lower expense ratio than a mutual fund
  • expense ratios are strong predictors of performance, low-cost funds beat high-cost funds
  • Expense ratio: an annual fee that both ETF and mutual fund charge to cover their management and administrative costs; everyone pays the fee, it is not a separate line item u see deducted on ur statement. the lower expense ratio, the better; expense ratio is a completely separate charge that all mutual funds (and all ETF) have, it is a annual charge everyone pays
  • the expense ratio or cost to the customer for operating the fund often matter more to relative performance than the star rating
  • expense ratio can help an investor make a better decision
  • if u spend extra money in ur overall expense ratio (i.e., ur cost of each fund), u willl more than likely underperform
  • expsense ratio is a strong predictor of performance; the funds with the lowest expense ratio produce higher total returns than the funds with higher expense ratio
  • while the expense ratio on index mutual funds tend to be low, it can be lower for an ETF---thus ETF for ur IRA is good, the less money u pay in fee, the more money u have left to grow for ur future
  • the goal is to choose mutual funds that have no "load" and have the smallest possible annual expense (expense ratio) --- see retirement post for more details about "load"
  • ETF doesn't make sense if u make periodic investment (dollar cost averaging) on a monthly or quarterly basis --- because ETF has to be bought just like a stock, i.e., u must pay a commission every time u buy or sell shares of an ETF, if u invest monthly, u end up paying commission, e.g., 10 dollars, every month
  • expert recommend ETF for lump-sum investor, if u can invest 4,000 in one lump sum, the cost to invest all that money in one ETF is 10 dollars
  • strategy:
  1. 90 % of you money in an ETF that tracks a broad US benchmark
  2. 10 % in a diversified international fund
  • one good, low-cost ETF that tracks a broad US index is the Vanguard Extended Market (ticker symbol VTI)
  • a good, low-cost ETF that invests in international stock is the iShares MSCI EAFE index ETF (ticker symbol EFA)
  • http://greenhornfinancefootnote.blogspot.tw/2017/01/etfa-simple-portfolio-of-commission.html
  • how to open an ETF account
  1. if u intend to be a lump-sum investor, u open ur IRA account at a discount brokerage fime
  2. the "discount" in discount brokerage means that u are charged lower fees when u buy and sell investments than u would be at a full-service brokerage that provides additional hand-holding support, research, and a bunch of other services that you probably don't need.
  3. on the websites, look for the links for retirement or IRA investing, download a form and fill it out, send it back in
  4. ur IRA investment form will ask u to choose what investments u want ur IRA to be investsed in and how u intend to send in ur money: (1) u can do a direct electronic transfer from ur saving or money market account to the brokerage, or (2) u can send in a check 
  5. for a list of the best discount brokerage, check suze website 
to learn more about mutual funds, http://www.morningstar.com/
enter the name or ticker symbol for a mutual fund, it will take u to a data page for that fund, including expense ratio and loads
ticker symbol has five letters and ends in X
  • a great place to open Roth IRA, T. Rowe Price mutual fund group https://www3.troweprice.com/usis/personal-investing/mutual-funds.html. u can open an account where u invest as little as $ 50 a month
  • T. Rowe's Extended Equity Market Index fund is a smart choice for ur core index fund
  • it also have an international stock fund for the remaining 10 % of ur Roth IRA
  • Vanguard mutual fund company https://investor.vanguard.com/mutual-funds/ ; is great, it tends to have the lowest expense ratio of any no-load firm, the minimum initial investment for its funds is $ 3000 (and then $ 100 after that), check suze website for strategy for how to build a Roth IRA using vanguard fund
債券型基金 (bond fund)
  • 經由個人儲蓄帳戶投資企業的債券型基金
  • 投資風險較股票型基金及指數型基金為低
  • 債券型基金等同於企業向你開出借條, 向投資人借錢, 企業同意在一定的期間之內, 給予一定額度的利息
  • bond funds go up and down in value depending on what is happening with interest rates
Target Date funds

  • target funds are like mutual funds in the hybrid category that keep on changing the asset mix in its portfolio
  • they are often ideal products in IRAs and 401k, given their long term nature
  • these funds adjust their risk profile are u age from a more growth oriented portfolio to a more stable and income oriented portfolio
  • annually decreasing the risk level of the portfolio are u age
  • attractive for small investors who can't afford a financial advisor
  • u still need to review the fund up front and ongoing to make sure it operates as u intend
  • several of these funds have acceptable levels of fees, some of these fund types have been known to be excessive in their fee structure

Wrap account
  • the customer pays an annual fee to the broker for the account, plus the fund management charges that go to the fund company, and that is all
  • each time the broker and the customer decide to change a position, there is no charge
  • many investors like that they are on the same side of the table with their brokers in terms of recommendation---as the broker and the brokerage company are paid the same, irrespective of trading frequency
  • u still need to check the underlying feels in each fund to make sure they are similar to other public funds available
  • in a wrap account, a brokerage manages an investor's porfolio for a flat quarterly or annual fee based on the total assets in the account. The various individual funds or securities are "wrapped" into a single account. The advantage of a wrap is that it brings a broker and an investor on the same side;  since broker only get a flat annual fee, they only trade when it is advantageous to u.
  • two forms of wrap accounts: (1) separately managed accounts, (2) mutual fund wraps, see gmail for more details


Asset-backed securities funds
  • are sold as low risks, yet there is no active secondary market to buy back this product
  • there may be one broker, the same one that sold u the product. However, if a crisis hits, u can't count on that broker alone to buy back ur product at an acceptable price.
  • thus, if there is not a broad base of market makers, or an established exchange that makes a market in the underlying securities in this fund, the fund itself is not as low risk or as highly liquid as it is labeled.
  • a market maker is a broker-dealer that quotes both a buy and a sell price in a financial instrument, hoping to make a profit on the bid-offer spread.

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