blog01apr2007

Hot Off the Web
Chevreau in the Financial Post’s “Common sense says bet on Bogle” reviews the conflicting advice one gets when reading financial how-to books. He contrasts the advice offered in Bogle’s “The little book of common sense investing” with Schiff’s “Crash Proof: How to profit from the coming economic collapse”, and comes down clearly on the side of Bogle’s view. Bogle suggests to stay put for the long-run with mostly low cost U.S. total stock market index funds rather then Schiff’s advice to replace all U.S. securities with foreign stocks, gold and cash. As an aside Chevreau mentions that his family’s asset allocation is 40% in Canadian fixed income and 60% in stocks divided into three equal 20% slices Candian, U.S., and foreign stocks (not a bad mix).
The number of ETFs continues to grow. Vanguard released VEU which tracks the FTSE All-world ex-U.S. Index with 2200 stocks from 47 non-U.S. developed and emerging market countries. While I haven’t as yet had a chance to study it in great detail, it sounds like VEU and the VTI (Vanguard’s Total U.S. stock market index) could be used on approximately 50:50 basis to cover the world equity markets.
Barron’s had three ETF related articles in the past week. First “Bonding with ETFs”  the still small but growing list of fixed income ETFs gets enhanced with Barclays recent addition of a mortgage-backed securities based ETF and Bear Stearns proposed actively manages bond ETF; this would be on top of a good set of base ofeferings by Barclays and Vanguard. Then in an interview with Barlays iShares CEO described in “What’s the skinny on skinny ETFs?”  we hear that while ETF assets are more or less evenly held by individuals and institutions, 90-95% of the trading is between institutions. Interestingly, he was not particularly positive on the new fundamental indexes, calling them a “primitive form of active management”, implying that they can do better. And in “Active management and ETFs”  there is a discussion on the proposed use of proxy portfolios as a means of eliminating the need for the managers to divulge their holdings to market makers for upcoming active ETFs. This may allow actively managed ETFs to proceed.
In “Recommended readings on annuities” WSJ’s Ruffenach reports on a long list of references suggested by York University’s Prof. Milevsky suggested annuities reading list. You should definitely look at if you are contemplating an annuity.
And finally, the Conference Board of Canada survey results reported in “Looming pension crisis worries execs” indicate that 80% of the executives believe that there is a widespread pension crisis and that 61% felt that this will continue to be a long-term problem. (Not a surprise)
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