Money Management
Monday, March 28, 2005
Evanson Asset Management -- low fee financial advisor with access to DFA
Evanson Asset Management -- low fee financial advisor with access to DFA
Sunday, August 15, 2004
Variable Annuities
[Bernstein2] recommends Variable Annuities as a tax-sheltered investment vehicle, useful for someone whose tax-sheltered accounts contain a percentage of their total portfolio considerably below what is necessary to diversify sufficiently into REITs and bonds, which can only be reasonably used in a tax-sheltered account. Vanguard, as always, comes to the rescue with very good (low fees, no load or commission, excellent underlying fund choice) variable annuity. Here are the useful resources:
1) An excellent annuity intro article by Barry Perlman, Chris Lott, and Ed Zollars. At the end, it contains its own set of helpful links, but the article is excellent by itself.
2) Vanguard Variable Annuity program
Wednesday, August 11, 2004
Tax managed investing
Articles on tax-efficient investment, indexing, and survivorship bias at Aperio Group , a firm that specializes in tax-efficient portfolio management and similar hard-to-find services. Another firm to consider, a supposedly bigger one: Parametric Portfolio Associates. The key questions I have about firms like these are:
1) What is the fee structure?
2) What is the advantage of going with them as opposed to doing the same thing yourself?
3) What are the risks involved?
Paper on tax managed investing
Sunday, August 01, 2004
REITs asset class
Frank Armstrong article about REITs on fee-only-advisor.com.
William J. Bernstein advocates REITs in Intelligent Asset Allocator.
Roger C. Gibson advocates REITs in Asset Allocation.
Vanguard has a REITs Index fund, and there are REITs ETFs on the market.
Tax Implications: Most of the growth of REITs comes from dividents which are taxed as regular income (i.e., they are not qualified corporate dividents). Further, despite the brevity of the historical period over which REITs performance data is available, they are very much on par with stocks EV and variance wise, while having quite low correlation with S&P500 (they have higher correlation with small cap stocks).
Saturday, July 31, 2004
ETFs vs. Index Funds
William J. Bernstein, the author of Intelligent Asset Allocator, argues against ETFs.
David of techuncovered.com, the author of the excellent "A Better Way to Invest", refutes Bernstein's argument
I find David's arguments very convincing, and at this point, at least, I am again leaning heavily towards using ETFs.
Tuesday, July 27, 2004
Commodities Asset Class
Commodities appears to be a very desirable asset class. It has near-zero correlation with stocks and bonds, is a good inflation hedge, and many advisors, including Asset Allocation author recommend it. The trouble is that indexing choices in this class are few, and they are somewhat active, and they have very high fees. Some relevant information:
The Funds:
Two leading commodities "index" (they are actually active) funds:
Oppenheimer Real Asset fund (QRAXX)
Pimco Real Return fund (PCRDX)
SSGA: another possible fund
Merryl Lynch Commodities Index-like Active Fund
The Articles:
Frank Armstrong of fee-only-advisor.com pro-commodities article.
Goldman Sachs Commodity Index (GSCI®) description article at Goldman Sachs.
TechUncovered opinion of commodities
An article on financialsense.com summarizing advantages of commodity indexing
Somewhat chilling article about Oppenheimer Real Asset commodities fund on financialadvisormagazine.com
Many articles show up by doing a search for either of the above symbols on finance.yahoo.com, e.g.:
General commodities overview article on Yahoo briefly outlining commodities fund choices.
Wednesday, July 21, 2004
Burton Malkiel talk notes
Burton Malkiel gave a talk today (essentially, a condensed summary of a subset of Random Walk Guide to Investment), and here are some notes I took. I was only writing things down that I either did not know, or already forgot, or found interesting.
1. HR 10 = KEOGH: use these if you have a source of income outside main job
2. College savings plans have no tax when you take money out (unlike 401K
distributions, which are taxed as ordinary income).
3. He advised against investing in municipal bond funds (or any bond funds
for that matter), and instead to use US Treasury Direct to buy US Treasuries, and to buy Municipal tax-free AAA insurance bonds directly. This is supposed to save on the index fund fees. I disagree with this approach, as total bon d market index fund fees are REALLY low, whereas you get exposure to all kinds of bonds, including junk bonds, which, in a way, are a somewhat different asset class.
4. Treasuries should be bought newly-issued, to avoid commission.
5. Municipal bonds: buy newly-issued directly as well. (same reason)
6. TIPS (Treasury Inflation Protected Securities): these have a place in
every portfolio, since they are the only 100% certain inflation hedge.
But, keep these inside tax-free (or deferred) retirement accounts.
7. He reinforced the general account allocation wisdom, of keeping high
short term income generating assets inside tax shelters, while keeping
the mainly-long-term-capital-gains appreciation assets in regular
taxable accounts (the assumption being that one has more money than
can fit in ALL tax-free/deferred accounts).
