The average hedge-fund manager returned anywhere from 2.3% to 10.9% depending on which hedge-fund index you choose to follow.
According to Morningstar, some 4, 757 actively managed stock funds beat the broad Hennessee hedge fund index and returned performance better than 8%.
Last year was the only one of the past ten in which funds of funds did not trail the company's hedge-fund index.
These funds are the Developed Markets Index Fund ( VDMIX), the European Stock Index Fund ( VEURX) and the Pacific Stock Index Fund ( VPACX).
The Lipper Emerging Markets Fund index average return was 20.08 percent.
The illusion of hedge fund invincibility was shattered in 2008 when the average hedge fund lost 19.1%, according to the Dow Jones Credit Suisse Hedge Fund Index.
The data collector based in Chicago has a hedge fund index that shows hedge fund returns rose by 20.4%, the best year for the index since 1999, when funds returned 31.29%.
Hennessee Group, a New York firm that advises institutional and private clients on where to make hedge fund investments, says its own hedge fund index is up 4.5% so far this year.
The hedge fund index tracks a limited segment of the market, however, and may not have captured the 15% or greater declines some of the big funds have felt this year, analysts said.
Vernon Sumnicht, chief executive of iSectors, says the hedge-fund index was always the internal benchmark for the Liquid Alternatives model, but that the firm that reports iSectors' returns to advisers and clients wasn't able to obtain full access to the hedge-fund index data until recently.
According to an index from the firm Rothstein Kass, female hedge fund managers produced a return of nearly 9% through the third quarter of 2012 (based on 67 hedge funds with female owners or managers), while their male counterparts, according to the HFRX Global Hedge Fund Index, choked out a mere 2.69% net return through September.
For those investors who want some exposure to foreign stocks, Bogle recommends an investment of no more than 20 percent of your total stock allocation, divided equally, into two Vanguard funds: Developed Markets Index Fund and Emerging Markets Index Fund.
Two regionally focused ETFs are the MSCI BRIC Index Fund and the MSCI Brazil Index Fund.
Mr. Bogle believes that a simple portfolio including only two funds, the Vanguard Total Stock Market Index Fund and Total Bond Market Index Fund would be sufficient for many investors.
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Following this model, you could invest your funds in Vanguard Total Stock Market Index Fund and Vanguard Total Bond Market Index Fund.
The first takes a low-cost, total market index fund and augmenting it with a value index fund as desired.
Two sector ETFs are the MSCI Emerging Markets Financials Sector Index Fund and the MSCI Emerging Markets Materials Sector Index Fund.
According to the ETF Finder at ETF Channel, Intel Corp is a member of both the iShares MSCI USA ESG Select Social Index Fund ETF (KLD), making up 1.48% of the underlying holdings of the fund, as well as the iShares MSCI KLD 400 Social Index Fund ETF (DSI), where INTC makes up 1.83% of the underlying holdings of the fund.
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According to the ETF Finder at ETF Channel, Travelers Companies Inc is a member of both the iShares MSCI USA ESG Select Social Index Fund ETF (KLD), making up 2.07% of the underlying holdings of the fund, as well as the iShares MSCI KLD 400 Social Index Fund ETF (DSI), where TRV makes up 0.49% of the underlying holdings of the fund.
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To show this, I created and rebalanced several portfolios using the Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) and the Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX).
This strategy can also be expanded to international investing by adding a small-cap international value index and real estate fund to a broad international index fund.
Liken it to the difference between a no-load index fund and an index ETF.
Others advise selling an active fund for an index fund or vice versa.
Chart Analysis: Though the iShares Trust FTSE China 25 Index Fund ( FXI) is considered by most to be the favored China play, there are several reasons that I prefer the iShares MSCI China Index Fund ( MCHI).
An investor who bought a NASDAQ 100 index fund like PowerShares QQQ ( QQQ) would have gained 12.7% for the year through July, while an investor who held an emerging markets index fund like iShares MSCI Emerging Markets ( EEM) would have lost 15.2%.
Perhaps you should go all the way to a cheap index fund, like Vanguard Index Total Stock Market, which has both low expenses (0.2% annually) and rock-bottom turnover (3% ).
Not only did the average actively managed mutual fund underperform its comparable index fund net of fees, but it was also almost impossible to identify actively managed mutual funds that could outperform their benchmarks on a consistent basis.
The firm, founded in 1998 with headquarters in London, focuses strictly on technology companies and will invest two-thirds of the fund in Europe and Israel and the rest in the U.S. Including this fund, Index has raised EUR1 billion over the last 12 months, including a EUR500 million growth fund and a EUR150 million life sciences fund.
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Magellan calls itself a growth fund and acts like an index fund.
It's to signify the launching of Singapore's first homegrown exchange-traded fund, the streettracks Straits Times Index Fund.
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