We had the opportunity to ask Tyler how he's allocating among different asset classes in this environment, and what his overall strategy is for outperformance in 2010.
The above chart represents the return for nearly every combination of equity investments you could have made over the last year. No sector, style, world region or market cap escaped devaluing more than 25%. Now, compare this to the start of our last recession between 2000 and 2001.
With traditional mutual funds expected to report billions of dollars in capital gains at year's end, investors face a double whammy.
Besides being forced to pay more in taxes, stock funds are producing double-digit losses in 2008. The broad Vanguard Total Stock Market ETF (NYSE: VTI) is down more than 38% so far.
If last year was the coming out party for bond exchange-traded funds [ETFs], then 2008 is lining up as the "Year of the Quant Stock ETF."
After years of anticipation, three prospectuses for active equities ETFs were filed in the second half of 2007. In addition, a majority of the 451 ETFs and exchange-traded notes [ETNs] currently on file with the Securities and Exchange Commission [SEC] involve some form of quantitative or alternative methodology to index construction.
iShares offers a set of Russell index ETFs that divide the U.S.
market into large caps (IWM), mid caps (IWR), small caps (IWM) and micro
caps (IWC). SSgA offers ETFs based on Dow Jones indexes that also divide
the market into large cap (ELR), mid cap (EMM), and small cap (DIA) iShares S&P 100 Index Fund (OEF) Rydex Russell Top 50 ETF (XLG) PowerShares Active Mega Cap (PMA) Complete Story »
Toro submits:An article in the Wall Street Journal Thursday highlighted the shift of institutional assets away from stocks and bonds into alternative asset classes:
Driven by the need to increase returns and meet long-term obligations, pension funds and endowments are shifting money into international stocks and hedge funds at the expense of U.S. stocks, says a new report.
The annual survey, released yesterday by consulting firm Greenwich Associates, says large U.S. institutional investors are placing increasing amounts of money in so-called alternative investments, which include hedge funds and private equity....
Our bias in the U.S. stock market continues to be towards larger-capitalization stocks. Even though small-cap stocks have more than held their own since we adopted this posture at the outset of 2005, leadership has shifted towards large-caps in the past three months, and we expect that trend to continue.
Moreover, should a broad-based market decline occur, the downside risk for small-cap stocks is much more significant than for large-cap stocks. Small-caps are currently selling at higher P/E ratios than large-caps. Normally, small-caps sell at a discount because of their higher risk characteristics....
Warren Buffett and Charlie Munger held a five-hour question and answer session at Berkshire Hathaway's annual meeting. Buffett and Munger both discussed their view of various asset classes. Here are the comments (from notes taken by entrepreneur Paul Allen), arranged by asset class with a listing of the relevant ETFs:
Here's a list of available exchange-traded funds (ETFs) and closed-end funds (CEFs) covered by ETF Investor. Clicking on the ticker symbol pulls up a list of articles that discuss or mention that fund.
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