The Best and Worst of 2012

Only one equity style, small cap value (represented by the Russell 2000 Value index), made our list of best and worst performing asset classes, as measured by major indices.  Compared to the Dow Jones Industrial Average (+10.24%), the S&P 500 (+16.00%),  and the Barclays Aggregate (+4.32%), the best performing asset classes posted great numbers.    The worst performing asset class of 2012 was managed futures;  the lack of clear market trends throughout the year wa...
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2013 Forecasts from Market Strategists – Barron’s

As our clients know, we do not put much faith in market timing or analyst forecasts.  I don't look at  them the same way as I think about the Mayan calendar (where will you be on December 21st?), it's just that markets are subject to inherent randomness and chance events that, over the short term, affect prices far more than other factors, such as valuation.  Our own forward looking estimates of asset class returns are based on our long-term estimates of return and risk premia;&nb...
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Secure Your Retirement – Christine Benz of Morningstar

Christine Benz: Hi, I am Christine Benz for Morningstar.com. This session is called, "Secure Your Retirement Paycheck." I have a lot of information to go through in this session, but before we get started I just wanted to make a couple of quick comments. The first is that there is another session going on concurrently called, "Smart Diversification Strategies." For people who are in the audience here in person, they can just head over to that room if they would like to hear from some of o...
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Active, Passive, or Both?

Active, Passive, or Both? A successful portfolio might include components of both indexing and active fund management, says Morningstar's Christine Benz. Related Links Where Active Has Beaten Passive This Year A Fine Line in the Active Versus Passive Debate Indexing and the Average Active Manager Archive: Where Active Management Is Adding Value When Indexing Fails: Junk Bonds Jason Stipp: I'm Jason Stipp for Morningstar. Active fund managers have had yet another rough year in beating t...
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Another Message from Cassandra: Caution Is in the Wind

In its September publication, Morningstar Advisor spotlights muncipal bonds through a series of  articles.  As followers of this blog know, we have been concerned about the municipal market for the past two years, missing out on a sustained rally during that time.  Fortunately, other asset classes that we have recommended (equities, MLPs, REITs, high yield) have performed even better than munis, so we have not suffered because of our errant market view.   Recently there...
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Average Mutual Fund Expenses

via morningstar.com Jeffrey Ptak, CFA, recently wrote about the change in average mutual fund expenses over the past twenty years. Morningstar's research, which examined more than 30,000 distinct share classes of mutual funds, yielded a surprising result: average expenses have actually increased overall, especially in certain categories such as municipal securities. The average expense ratio has climbed above 1.2% during the previous two decades....
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Rethinking Risk Tolerance

By Jason Stipp and Christine Benz | 8-8-2012 1:00 PM Rethinking Risk Tolerance Beyond their ability to stomach short-term volatility, investors should define their risk tolerance in terms of their actual risk capacity and the probability of hitting their retirement goals, says Morningstar's Christine Benz.   Related Links Risk and Return Revisited When Less Risk Equals More Reward Oaktree's Howard Marks on Understanding Risk Dorsey:...
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