by Chris Thompson

Online brokers are all over so it’s hard to figure out which one is really the best. I’ve compiled a list of the different ones out there and give a brief description of my thoughts on each.

Etrade is one of the earlier players in the discount brokerage and practically invented online brokerages. The user interface is amazing and the commissions are on the higher side in this day and age.

TD Ameritrade is also an early player and it’s main competition is Charles Schwab and Etrade. They have good advertising but the interface isn’t great and support is okay mediocre. However, they do have a solid following and trades are $9.99 no matter how much you trade or have with them.

Charles Schwab have been cleaning up in the last year or so, especially with the troubles of Etrade. Honestly, I’ve been thinking …

by Jane Calhoun

Even during the economic downturn, mutual funds continue to be popular as investments, since they make it relatively easier to get into the market. But do you know the mutual fund basics before you invest in these vehicles? Even though mutual funds have been pitched to investors as no-brainer places to stash your cash, the results of the past year demonstrate that getting good returns is never easy.

Mutual funds are everywhere, too – there are more than 10,000 different funds, and they’ve together amassed more than $4 trillion in investments! If you want to profit through mutual fund investing, you need to kow the basics and whether they are truly “safe”.

Until late 2008 and into 2009, mutual funds enjoyed quite a reputation for steady returns and safety. They also gave investors an easy way to diversify their holdings. Funds also help spread the market risk …

I got a couple of reasonable "oh no you di-ints" on the post this morning that tried to compare complex products versus simple.The fund in question is TFS Market Neutral (TFSMX).My only observation was that the fund is complicated. One reader noted that it has more than bounced back from its August 2007 low and another reader said that he doubted that staying simple could match the result from TFSMX over varied market conditions.The chart goes back to the inception of the Rydex Managed Futures Fund (RYMFX) which I own. The chart also shows two of the hotter sectors over that time, as measured by sector ETF, as well. It would be fair to criticize the chart as not being long enough but it has been a wild 17 months and it is as ...

Over the weekend as I was putting the finishing touches on an article for TSCM I stumbled across a concept that is probably not new, relative to this site, but that I did (by accident?) articulate a little differently.

Over the last eight or nine years one could argue that domestic indexing has not worked. Since the start of 2000 SPY is down about 10%. Since inception (mid 2000) iShares Russell 2000 (IWM) is up a hair under 40% which works out to about 5% annualized.

While very unlikely, what if indexing fails again over the next eight or nine years? Allocating too much to index funds that go nowhere for a decade and half creates a real headwind for reaching financial goals. As I find portfolio construction, and its evolution, to be an interesting topic…

What if indexing doesn’t work or more correctly what could you do if you think it might …

This is one podcast that I subscribe to and listen to religiously.

Vanguard’s Plain Talk on Investing podcast:
In this episode, “Index funds vs. active funds”, Vanguard Chief Investment Officer Gus Sauter will help you better understand two different approaches to mutual fund investing—indexing and active management.
Download the podcast in MP3 file.

You can also read the transcript while

We selected the single country funds available in the Index Universe database for calendar year return analysis. Cumulative and annualized returns are important, but so too are discreet calendar years.

While statistical tools may theoretically, adequately describe variation or consistency of returns, a visual impression can be helpful too. This analysis is primarily visual.

Within the list we used a traffic metaphor with colored backgrounds of red, yellow and green for each year for each fund as follows:

red for returns < -5% yellow for returns between 5% and -5% (or no data) green for returns > 5%

Funds with no data, were not in operation for those full years.

If you are interested in those country index funds with missing data, you may benefit by researching the index on which the fund is based to estimate how the fund might have done had it been in operation during the missing years. Don’t

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This screened ETF list is based on a combination of features that are often requested by more cautious equity investors:

funds with history and reasonable liquidity acceptable expense ratios for the type of portfolio not too much volatility for the return some current yield better total returns than bonds

The funds in the list are not recommendations. They are simply idea possibilities for do-it-yourself investors who may find the particular screening criteria useful.

The funds do not represent a full spread of the asset classes which we believe should be in a well designed portfolio.

The universe from which they were filtered is the entire database of hundreds of ETFs at www.IndexUniverse.com.

Important Note:

The fact that cautious investors ask the kinds of questions on which the filter is based, does not mean the funds that make it through the filter are conservative or necessarily good investments. In fact, some

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One of the principal reasons for asset allocation is risk management. 

Market risk is generally defined as return fluctuation – volatility.  That is different than issue risk (the risk of owning a single stock or bond issue), which includes not only volatility, but also the risk of company bankruptcy or default on bonds.

While most investment professionals understand and take the risk reduction aspect of asset allocation for granted, that is not the case for all investment advisory clients.  We have been asked on more than one occasion, how we know that to be true, and for some evidence of that truth.

There are probably many ways to respond to that question, one of which is with a practical example with real market data.  We have created one such example for this article.

The image below shows the relative weekly return and weekly rate of change of six index investment funds representing six major

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As you select asset classes and class weights for your portfolio, you should take into consideration, among other things, the mean return of those classes over different periods of time.

History is no guarantee of the future, but lack of understanding of the past may result surprising returns. It’s a good idea to do all you can to minimize surprises.

The chart shows the relative 1, 3, 5 10 and 15 year annualized returns for six major asset classes. The key feature to observe is the relative size of the return for each class within each year.

You can see bonds as a low return, but stabilizing asset class. You can see the US market has been weak relative to foreign markets. Commodities have been strong. Real estate did well, until it fell out out bed in a major way during the last 12 months.

A representative (but not exhaustive) list

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