Everyone I know must read Barron's Cover Story on Vanguard

Everyone I know who does not have an account or ETF with Vanguard needs to read this story from the cover of Barron's. If you do own Vanguard, you already know some of this. If you have money with anyone else, you NEED to know how your interests and your investment firm's interests line up (spoiler alert: they don't!). For decades I was a commodity indexer and did not compete with Vanguard. We met with them and they passed on commodities entirely. But I tried to run my firm on the same principles.
In my opinion, Vanguard is NOT playing catch up. The competition will do everything they can to upsell and eventually increase fees, while Vanguard, for a generation, has IMHO served the best interests of all long-term investors.

Feel free to post comments.

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.
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Last Day of the Year-The Best Day to Buy

Most investors have heard of the "January effect" or "triple witching" day but there's little mention of the last day of the year, THE best day to buy!

Next Tuesday 12/31/2019 at 4 PM funds, stocks and everything else will close on the last day of the month/year/decade and a new "bogey", target or gauge for performance will be set for every investor. Money managers are laser focused on getting the highest one year, three year, five year, ten year and (for the young at heart) twenty year returns for their funds.

The 20 Year Indexes chart below shows the 20 year continuously compounded gains for the major investment indexes starting at 1000 on the close 20 years ago, 12/31/1999-the beginning of the new millennium. One would guess that the Russell 2000 index would be the way to go!

The One Year Indexes chart tells a different story.

The NASDAQ index was the top performer this year, while everything else, except commodities, were all competitive. Different time periods create different winners. IMHO the S&P 500 index is the ideal long term index for nearly all investors.

The continuously compounded rolling returns show this clearly:

Source: Yahoo Finance as of the close Friday, 12/27/2019

The moral of the story is that the index you buy doesn't matter all that much as long as you buy and hold for the long term. Take and pick and, excepting the BCOM commodity index, get your decent long-term gains!

Feel free to post comments.

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.

Back to Basics: FBND versus BND

Fidelity has been touting the performance of their total bond fund, showing impressive charts in ads. As is my want, let's test these results and compare the Fidelity Total Bond Fund ETF (FBND) to the Vanguard Total Bond Fund ETF (BND).

First the fund companies' own published comparable results, in their own words:

Fidelity's FBND "Snapshot"

Quarter-End Average Annual Total Returns AS OF 09/30/2019

                NAV Return Market Return

1 Year +9.67%          +9.62%
3 Year +3.36%          +3.25%
5 Year     -- --
10 Year -- --
Life         +3.59%          +3.50%

Life as of NAV inception date: 10/06/2014   Life market returns are as of the first day the ETF traded on an exchange, which may occur a few days after the NAV inception date. Market returns are based on the closing price on the listed exchange at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times.
Gross Expense Ratio: 0.36%

Vanguard BND ETF "Profile"

Performance
Total Bond Market ETF
Average annual returns
as of 09/30/2019
Total Bond Market ETF

1-yr         3-yr         5-yr       10-yr        Since inception 04/03/2007
10.91% 4.16% 3.06% 3.52% 4.23%

Given Fidelity's own published results, one wonders why advertise them?

Using Yahoo daily historical data, let's do our own analysis.

Frankly, there is little difference between ETFs. Beginning with the FBND start date 10/9/2014 until 12/3/2019, using continuously compounded daily returns, $1000 in BND has grown to $1180.72 while FNBD has grown to $1191.54 over the same period.

Note, ALL these returns are highly period dependent. Given today's results, Fidelity would be happy to advertise the FBND ETF return.

Quick note on yield or distribution claims. They are not relevant. What is relevant to investors, including income investors, is ONLY the "Total Return". Total returns are the source of growth, dividends, "distributions" or withdrawals of any kind. Total return is the number that income investors and all investors must pay attention to.

Feel free to post comments.

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.