Being smart with $$ -- July 2014 posts on Vanguard's Myths of Indexing Debunked

July 17, 2014
More indexing myths? OK, last one. "You get what you pay for."  Should we expect highly-rated funds with high fees to perform better? Vanguard did an analysis and as you have guessed by now, high-cost funds underperformed low-cost funds for the last 10 years. But can you believe that over the last 10 years, the higher a fund was rated by Morningstar, the worse it did vs. its peers (in the three years after receiving the rating)?
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

July 16, 2014
Still negative on indexing? Vanguard's Myth 2 says people believe that indexing gives you just average returns and don't you want better than average? But Vanguard points out that over the last 10 years, large-cap indexing has been more than 80% of actively managed large-cap funds. That doesn't sound average to me.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

July 15, 2014
Don't believe in index funds? Vanguard points out the problem with myths of indexing. Myth 1: Indexing only works in efficient markets. Some people say it doesn't work for sectors like emerging markets. But every market has an average return and Bogle of Vanguard points out "investors as a group must fall short of the market return by the amount of the costs they incur."  And for the 10 years ended 12/31/13, about 75% of active emerging markets funds underperformed the index. Myth 1 busted!!
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com