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This popular type of investment fund nearly always loses money miragenews.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from miragenews.com Daily Mail and Mail on Sunday newspapers.
A Harsh Appraisal The article, by Massimo Massa, Rabih Moussawi, and Andrei Simonov, fiercely criticizes its subject. The authors find that target-date funds underperform other funds to a staggering degree. This shortfall occurs because target-date funds exploit their relatively captive audiences, which are unlikely to punish subpar returns by redeeming their shares. For a similar reason, target-date funds also get away with fee skimming. I agree with the authors initial assumptions. They are correct that target-date funds have unusually loyal shareholders who are relatively insensitive to both performance and costs. It is also true that those who promote target-date funds by which I mean not only fund companies, but also 401(k) sponsors, consultants, and the media have counseled target-date investors to invest for the long run. They have been instructed not to sweat the details. Finally, it is true that most target-date fund lineups have closed structures, meanin ....
A Higher Capital Gains Tax Could Move More Investors to ETFs May 5, 2021 ETFs are often praised for their tax efficiency. With higher capital gains taxes expected, more investors may be moving their money to ETFs. “The booming ETF industry may be set to lure even more cash in the coming years as rich Americans facing higher capital gains taxes look to limit what they owe Uncle Sam,” a Bloomberg article explained. “President Joe Biden’s plan to double the rate those making more than $1 million a year pay on investment profits would accelerate a shift that’s already seen hundreds of billions of dollars migrate from mutual funds to exchange-traded funds, market watchers say,” the article said further. “That’s because ETFs are generally more tax efficient, spinning off fewer capital-gain disbursements that for some could soon become a lot more costly.” ....
Why you should worry about the flood of new cash into U.S. stock funds MarketWatch 1 hr ago MARK HULBERT U.S. stock funds now are riding a river of new cash from investors and that is not a bullish sign. Many investors might see this differently that a huge influx of cash is positive. In fact, fund flows are a contrarian indicator: the U.S. stock market in the past has performed better when there is a net outflow of cash. The evidence is summarized in the chart below, which plots net inflows of cash to U.S. stock funds (both open-end and exchange-traded funds) by year over the past decade. Notice that in all but two of the years since 2010 there have been net outflows. ....