If you invest in single asset class index funds like the Vanguard Total US Stock Market index or the Spartan International Index at Fidelity, you can easily compare the performance of your individual holdings to the market index they track.
Finally, the asset class should be investible with low-cost index funds and ETFs, or a least a near-index type, broadly diversified actively managed fund.
There is a multiplier effect that occurs in a portfolio when index funds are used to represent every asset class.
One is to offer a new share class as Vanguard is doing with its giant Vanguard 500 Index fund ( VFINX).
There is always debate among investors as to whether style investing using index funds or a style-based asset class fund is an active management strategy or a passive one.
Unlike their ETF predecessors, which typically provided passive exposure to a particular index of stocks, bonds or other asset class, this fund changes its weightings (in other ETFs) based on momentum in the market.
FORBES: Taking A Smoother Ride In An ETF That Makes Market Timing Calls
And his ten-year-old Deutsche Municipal Bond Fund did 7.26%, versus 5.98% for the Lehman Five Year General Obligation Index, putting it in the top 4% of its class.
Today, there are many style-based index funds, exchange-traded funds (ETFs), and style-based asset class funds that can be used to create a tilt.
In aggregate the market-cap-weighted shares of our 2010 class were up 43% over 12 months versus 21% for the FTSE Asia Pacific Small Cap stock index.
Viewing the active versus passive debate by studying individual asset class comparisons is useful, but it misses an important dynamic that benefits portfolio returns that hold several different index funds representing multiple asset classes.
During the same time frame high-yield bonds slumped 26% and bank loans fell 24%, while 5-year Treasuries gained 16%, according to our research (municipal bonds, another high-quality fixed income asset class, returned 9% over the same time span, as measured by the BarCap 5-year Municipal Bond Index).
FORBES: Are Your Bond Holdings Raising Your Portfolio's Risk Profile?
应用推荐