Generally, I’m an indexer. Two exceptions: Fidelity Total Bond Fund (FTBFX) and Vanguard Wellington (VWENX), which is about 35% bonds. I’ve held both for decades and based on long-term results, I believe–maybe irrationally–that active management has been worth the extra expense. John Bogle argued in one of his books that Wellington is a quasi index fund.
“The aggregate returns of all investors in the market must by necessity equal the total return of the market.”
So, no. Active management doesn’t make sense. Management fees, tax consequences and other costs of frequent trading make it nearly impossible for investors to beat the market using active management. The managers do great. The investors? Not so much.
Simply buy the total market at the lowest possible cost, at market weight. Then do nothing.
It definitely could although probably rarely. I might choose to do so when considering variability/volatility, steadiness of income stream, taxation consequences and indecisiveness about alternatives.
And I don’t understand why you would buy any bond fund when rates are more likely to go up than down.
But I own individual tax free royalty trusts in a taxable account. People here may think it is gambling, but I’ve done well with this piece of the mix. Sadly, last year’s success was extraordinary due to the Ukraine war, but even removing that, royalty trusts have provided income over the long term although very volatile short term.
Generally, I’m an indexer. Two exceptions: Fidelity Total Bond Fund (FTBFX) and Vanguard Wellington (VWENX), which is about 35% bonds. I’ve held both for decades and based on long-term results, I believe–maybe irrationally–that active management has been worth the extra expense. John Bogle argued in one of his books that Wellington is a quasi index fund.
“The aggregate returns of all investors in the market must by necessity equal the total return of the market.”
So, no. Active management doesn’t make sense. Management fees, tax consequences and other costs of frequent trading make it nearly impossible for investors to beat the market using active management. The managers do great. The investors? Not so much.
Simply buy the total market at the lowest possible cost, at market weight. Then do nothing.
It definitely could although probably rarely. I might choose to do so when considering variability/volatility, steadiness of income stream, taxation consequences and indecisiveness about alternatives.
No.
And I don’t understand why you would buy any bond fund when rates are more likely to go up than down.
But I own individual tax free royalty trusts in a taxable account. People here may think it is gambling, but I’ve done well with this piece of the mix. Sadly, last year’s success was extraordinary due to the Ukraine war, but even removing that, royalty trusts have provided income over the long term although very volatile short term.
Bond and Small Cap only. For the risk management.