On balance, it has lagged ever since. Two others peaked in The remaining three peaked no more recently than , more than a decade ago. That leaves just three funds. Identified in Exhibit 8. Hail to the victors! Significantly, while the portfolio managers for these three funds have changed over the years, the changes have been infrequent. Succeeding his father Shelby C. Will Danoff has been the lead manager of Fidelity Contrafund since , and Michael Price managed Franklin until , followed by a successor who ran the fund until But before you rush out to invest in these three funds with such truly remarkable long-term records, think about the next 35 years.
Think about the odds that they will con- tinue to outperform. Think about their present size. Think about the fact that within that time frame they are all virtually certain to have at least several new managers.
It is a changing and competitive world out there in mutual fund land, and no one knows what the fu- ture holds. But I wish these managers and the sharehold- ers of the funds they run the very best of luck. Conspicuous by its absence from this list of winning funds is Legg Mason Value Trust, managed since its inception by legendary investment professional supreme, Bill Miller.
Since the fund did not begin operations until , it is not on my list. But it provides several lessons about fund performance. But by , the gap had shrunk to 1. Unsurprisingly, the major inflows of investor capital did not begin until , the seventh year of the streak.
Will the fund be afflicted with the same malaise that attacked six of those nine long-term winners just discussed? Or is it merely a brief interval of bad luck. Who can know? Whatever the case, the odds in favor of owning a con- sistently successful equity fund are less than one out of a hundred. However one slices and dices the data, there can be no question that funds with long-serving portfolio man- agers and records of consistent excellence are the excep- tion rather than the rule in the mutual fund industry.
Just buy the hays tack! The haystack, of course, is the entire stock market portfolio, readily available through a low-cost index fund. The return of such a fund would have roughly matched or exceeded the returns of of the funds that began the year competition described earlier in this chapter.
And I see no reason that the same fund cannot achieve a roughly commensurate achievement in the years to come—not through any legerdemain, but merely through the relentless rules of arithmetic that you now must know so well. In fund performance, the past is rarely prologue. With his customary wisdom, Paul Samuelson sums up the difficulty of selecting superior managers in this parable.
A tad delusional? I think so. With all their buying and selling, active investors ensure the market is reason- ably efficient. That makes it possible for the rest of us to do the sensible thing, which is to index. Want to join me in this parasitic behavior? To build a well-diversified portfolio, you might stash 70 per- cent of your stock portfolio into a Dow Jones Wilshire index fund and the remaining 30 percent in an international-index fund.
Every single firm in the fund industry acknowledges my conclusion that past fund performance is of no help in projecting the future returns of mutual funds. Exhibits 5. Studies show that 95 percent of all investor dollars flow to funds rated four or five stars by Morningstar, the statistical service most broadly used by investors in evaluating fund returns.
How successful are fund choices based on the num- ber of stars awarded for such short-term achievements? Not very! Sadly, the orientation of fund investors toward recent short-term returns works worst in strong bull markets. Exhibit 9. The relative performance of the four- and five-star funds has improved since then. Rydex OTC RS Emerging Growth MorganStanley Capital Op Janus Olympus Janus Twenty Managers Capital Appreciation Janus Mercury Fidelity Aggressive Growth Van Wagoner Emerging Growth WM Growth Focused on Internet, telecom, and technology stocks, these funds generated an average return of 55 per- cent per year during the upswing—a cumulative return of percent for the full three years.
Well, you can guess what came next. Fund 9 on the upside actually was last— on the downside. Fund 1 dropped in rank to ; fund 2 dropped to , and fund 3 tumbled to On aver- age, the one-time 10 top funds in the bull market were out- performed by 95 percent of their peers in the bear market that followed.
For investors who believed that the past would be prologue, it was not a pretty result. More like 2 percent. Do the arithmetic. And with 3 years of average annual gains of 55 percent on the upside and annual losses averaging 34 percent on the downside Exhibit 9. Yet while that return was not particularly satisfactory in terms of the traditional returns reported by the average equity fund, it was hardly a disaster.
But for the shareholders of the funds, it was a disas- ter. By investing after seeing those mouth-watering cumu- lative returns that had averaged almost percent, achieved in a soaring bull market, nearly all the buyers of these funds had missed the upside. Then, not a moment too soon, they caught the full force of the downside. Result: While the funds themselves achieved a net gain of 13 percent, the in- vestors in these funds incurred a loss of 57 percent.
By in- vesting in these once high-flying funds, more than half of the capital that investors had placed in these hot funds had gone up in smoke. The message is clear: avoid per- formance chasing based on short-term returns, especially during great bull markets. As it hap- pened, the top 20 funds of that ranked number one in each year had a subsequent average ranking of among the list EXHIBIT 9.
During that period, the highest achievement on the fund list was turned in by the number one funds, which averaged a rank of in the subsequent year. The clear reversion to the mean suggested by that single test represented powerful evidence that winning performance by a mutual fund is unlikely to be repeated.
But there was no reason except common sense to as- sume that the to experience would recur. So, just for fun, I repeated the test in , beginning with the top-performing 20 funds in and the top 20 funds in each of the nine subsequent years. I then checked the rank of each fund in the following year, just as before. In general, the results were remarkably similar. The average subsequent rank of the top 20 funds from through was , outpacing 57 percent of their peers and barely above the average fund among the 1, fund total—just as in the prior test.
In an interesting rever- sal of fortune, however, the number one funds of that era turned out to have, not the highest subsequent ranking, but the lowest ranking among the top These champi- ons subsequently earned an average ranking of among the 1,fund total, outpacing only 34 percent of their peers.
The message is clear: reversion to the mean RTM —in this case, the tendency of funds whose records substantially exceed industry norms to return to average or below—is alive and well in the mutual fund industry. So please remem- ber that the stars produced in the mutual fund field are rarely stars; all too often they are comets, lighting up the firmament for a brief moment in time and then flaming out, their ashes floating gently to earth.
With each passing year, the reality is increasingly clear. Fund returns seem to be random. And by then, you might ask yourself questions like these: 1 How long will that manager, with that staff and with that strategy, remain on the job?
In short, selecting mutual funds on the basis of short-term performance is all too likely to be hazardous duty, and it is almost always destined to produce returns that fall far short of those achieved by the stock market, itself so easily achievable through an index fund. We run [the contest] for the first year [for 10, managers]. Now we run the game a second year. Again, we can expect 2, managers to be up two years in a row; another year, 1,; a fourth one, ; a fifth, We have now, simply in a fair game, managers who made money for five years in a row.
The number of managers with great track records in a given market depends far more on the number of people who started in the investment business in place of going to dental school , rather than on their ability to produce profits. What do you mean? Under normal circumstances, it takes between 20 and years [of monitoring performance] to statistically prove that a money manager is skillful, not lucky.
Investors need to know how the money management business really works. The game is unfair. Where do you invest? In Vanguard index funds. Once you throw in taxes, it just skewers the argument for active management. Personally, I think indexing wins hands-down. Professional investment advisers provide many other services including asset allocation, information on tax considerations, and advice on how to save while you work and on how to spend when you retire; and they are always there to con- sult with you about the financial markets.
Experienced advisers can also help you avoid the potholes along the investment highway. Put more grossly, they may help you avoid making such dumb mistakes as chasing past performance or trying to time the market. At their best, these impor- tant services can enhance the implementation of your investment program. The remaining 40 million families rely on profes- sional helpers. That is, their advice on equity fund selection produces re- turns for their clients that are probably not measurably different from those of the average fund, some 2.
And if professional investment consultants are wise enough—or lucky enough—to keep their clients from jump- ing on the latest and hottest bandwagon for example, the new economy craze of the late s, reflected in the mania for funds investing in technology, telecommunica- tions, and Internet stocks , their clients could earn returns that easily surpass the disappointing returns achieved by fund investors as a group. Remember the additional short- fall of 2.
To remind you, the nominal return of fund investors came to just 7. Alas from the standpoint of the advisers , there is sim- ply no evidence that the fund selection advice they provide has produced any better returns than those achieved by fund investors on average.
In fact, the evidence goes the other way. For equity funds purchased directly: 6. Specifically, the study found that adviser asset alloca- tions were no better, that they chased market trends, and that those they advised paid higher upfront charges. The other groups in- cluded funds operated by privately owned managers, by publicly-owned managers, by managers owned by finan- cial conglomerates, and by bank managers. The Merrill Lynch funds were 18 percentage points below the fund industry average; the Goldman Sachs and Morgan Stanley funds were 9 percentage points below av- erage; and both the Wells Fargo and Smith Barney funds were 8 percentage points behind.
Part of the reason for this disturbing performance may arise from the nature of the job. When the firm introduces a new fund, the brokers have to sell it to someone. Imagine a day when nobody sold anything, and the stock market lay fallow, silent all day long. A Merrill Lynch example illustrates the destructive challenges that are often faced by investors who rely on stockbrokers. The subsequent returns of the funds, however, were an incredible failure. Internet Strategies tanked almost immedi- ately.
Its asset value dropped 61 percent during the re- mainder of and another 62 percent by October The total loss was a cool 86 percent as most of its investors cashed out their shares at staggering losses. Keeping a record like that alive would have been a continuing embarrassment to the firm. For what it is worth, the losses in Focus Twenty were less severe. Its asset value declined 28 percent in the remain- der of , another 70 percent in , and another 39 percent in , before finally posting positive returns in the three years that followed.
But, unlike its Internet Strategies cousin, Focus Twenty soldiers on. The comparative standard would be the returns earned by Vanguard Index Fund. Each quarter, the Times faithfully published the records of the index fund and the advisers, tracking their initial portfolios and the subsequent changes they made.
By , seven years later, the Times reported their ac- complishments Exhibit That is, the average ad- viser produced a paper profit on his portfolio of recommended funds that was about 40 percent less than the profit on the index fund.
In mid, the Times abruptly terminated the con- test without notice. But the fact is that the Times terminated it at the very peak of the bull mar- ket, and at the moment of triumph for the index fund. Since then, the index fund, like the market itself, has barely held its own. Two advisers did considerably better than the index fund during that subsequent period; one was worse, and one about the same. Here is a final piece of compelling evidence to sup- port that thesis.
Mark Hulbert, editor of the Hulbert Fi- nancial Digest, has been monitoring the real-time records of financial advisers who report their recommendations in newsletters subscribed to by investors. Only three outper- formed the market over the subsequent 26 years. These examples surely reinforce the thesis that index funds endure, while most advisers and funds do not; that index fund returns strongly exceed the returns earned even by those advisers and funds that do survive; that the odds against successful fund selection by advisers are large, and that compounding these rather consistent differentials in rates of annual return mount up to truly staggering differ- ences in wealth accumulation over the long term.
If you consider the selection of an adviser, please take heed of these findings. If you decide to go ahead, make sure you are paying a fair fee which results in a deduction from whatever rate of return your fund portfolio earns. Since most investment advisory fees tend to begin in the range of 1 percent per year, be sure to balance the worth of the peripheral services that advisers provide against the re- duction in your returns that those fees are likely to repre- sent over time.
Finally—and this will hardly surprise you—look with particular favor on advisers who recom- mend stock and bond index funds in their model portfolios. The warning signs here are recommendations of load funds, insurance products, limited partner- ships, or separate accounts. It is simply not worth paying anybody more than 1 percent to manage your money. If he tells you that he is able to find managers who can beat the indexes, he is fooling both you and himself. Relying on even the best-intentioned financial advice seems to work only spasmodically.
How can suc- cessful fund selection prove so difficult? Because of some- thing that, deep down, our common sense tells us: Performance comes and goes. That factor is the costs of owning mutual funds. Costs go on foreve r. While some funds scale down their fee rates as assets grow, the reductions are usually suf- ficiently modest that high-cost funds tend to remain high- cost; lower-cost funds tend to remain lower-cost, and the few very low-cost funds tend to remain very low-cost.
The average-cost funds, too, tend to persist in that category. Another large cost of equity fund ownership is the sales charge paid on each purchase of shares. It, too, tends to persist. Load funds rarely become no-load funds, and vice versa.
I can recall no large fund organization making the immediate conversion from a load to a no- load distribution system since Vanguard took that drastic and unprecedented step 30 years ago. Transactions cost money, and we estimate that turnover costs are roughly 0. Similarly, 50 per- cent turnover would cost about 0. Rule of thumb: turnover costs equal 1 percent of the turnover rate. Most comparisons of fund costs rely solely on re- ported expense ratios, and uniformly find that higher costs are associated with lower returns.
This pattern holds not only for equity funds as a group, but in each of the nine Morningstar style boxes large-, mid-, and small- cap funds, each sorted into fund groups with growth, value, and blended objectives. While few independent comparisons take into account the additional cost of fund portfolio turnover, a similar relationship exists. Funds in the low-turnover quartile have consistently outperformed those in the high-turnover quartile for all equity funds as a group, and in each of the nine style boxes.
Tak- ing into account both costs, we find that the all-in annual costs range from 0. This exercise ignores sales charges and, therefore overstates the net returns earned by the funds in each quartile. Costs matter! Net annual return of low-cost funds, Pre-cost returns fall into a narrow range: a high of Costs account for most of the difference in the annual net returns earned by the funds. And there is another significant difference. Those highest-expense, highest- turnover-cost funds assumed fully 34 percent more risk than their lowest-cost cousins.
When we compound those annual returns over time, the cumulative difference reaches staggering proportions.
Total compound gain for the period: percent for the low-cost funds, percent for the high-cost funds, a near doubling of profit arising almost entirely from the cost differential. Talk about the relentless rules of humble arithmetic! In other words, the final value of the low-cost funds more than tripled over the decade, whereas the value of the high-cost funds barely doubled.
Again, yes, costs matter! But if you are seeking the lowest-cost funds, why limit the search to actively managed funds? The classic index fund had the lowest costs of all: an expense ratio averaging 0. With no measura- ble turnover costs, its total all-in costs were but 0. The gross return of the Index Fund was Carrying a lower risk than any of the four cost quartiles annual price volatility averaging If investors could rely on only a single factor to select future superior performers and to avoid future inferior performers, it would be fund costs.
The record could hardly be clearer: the more the managers and brokers take, the less the investors make. So why not own an index fund with no active manager and no management fee, and with virtually no trading of stocks through those Helpers mentioned in Chapter 1? Why not, indeed? Chapter 12 explores this idea further. And for much of that time, mil- lions of fund investors not to mention dozens of fi- nancial journalists including this one basically ignored him.
Sure, we recognized the intrinsic mer- its of index funds such as low annual expenses and because the funds keep turnover to a minimum, tiny transaction costs. Moreover, because index fund managers convert paper profits into realized gains less frequently than do the skippers of actively man- aged funds, shareholders pay less tax each year to Uncle Sam. To be sure, those three advantages form a trio as impressive as Domingo, Pavarotti, and Carreras.
You win. In fact, more often than not, aiming for bench- mark-matching returns through index funds assures shareholders of a better-than-average chance of out- performing the typical managed stock or bond port- folio. You have a right to call it, as you recently did in a booklet you wrote, The Triumph of Indexing. Several index funds carry expense ra- tios as low as 0.
And it works. The case for the success of indexing in the past is compelling and unarguable. And with the outlook for subdued returns on stocks during the decade ahead, I am concluding my anecdotal stroll through the relentless rules of humble arithmetic with a final statis- tical example that suggests what the future may hold.
We can, in fact, use statistics designed to project the odds that a passively managed index fund will outpace an actively managed equity fund over various time periods.
The particular example presented here assumes that index fund costs will run to 0. Result: Over one year, about 29 percent of active managers on average, would be expected to outpace the index; over five years about 15 percent would be expected to win; over 10 years, 9 percent; over 25 years, 5 percent; and over 50 years just 2 percent of active managers would be expected to win Exhibit How will the future actually play out?
So it looks as if our statistical odds are in the right ballpark. This arithmetic suggests—even demands— that index funds deserve an important place in your portfolio, even as they constitute the overriding portion of my own.
Whatever the case, in the era of subdued stock and bond market returns that most likely lies in prospect, fund costs will become more important than ever. Even more so when we move from the illusion that mutual funds as a group can capture whatever returns our finan- cial markets provide to the even greater illusion that most mutual fund investors can capture even those depleted re- turns in their own fund portfolios. My conclusions about the market returns we can expect in the years ahead, as well as my conclusions about the share of those returns that funds will capture, and the share of those returns that we investors will actually enjoy, have one thing in com- mon: They rely, not on opinion, but largely on mathe- matical facts—the relentless rules of humble arithmetic that make selecting winning funds rather like looking for a needle in a haystack.
You ignore these rules at your peril. If the road to investment success is filled with dan- gerous turns and giant potholes, never forget that sim- ple arithmetic can enable you to moderate those turns and avoid those potholes. So do your best to diversify to the nth degree; minimize your investment expenses; and focus your emotions where they cannot wreak the kind of havoc that most other people experience in their investment programs.
Rely on your own common sense. Emphasize all-stock-market index funds. Care- fully consider your risk tolerance and the portion of your investments you allocate to equities.
Then stay the course. I should add, importantly, that all index funds are not created equal. While their index-based portfolios are sub- stantially identical, their costs are anything but identical.
Some have miniscule expense ratios; others have expense ratios that surpass the bounds of reason. Some are no-load funds, but nearly a third, as it turns out, have substantial front-end loads, often with an option to pay those loads over a period of usually five years; others entail the pay- ment of a standard brokerage commission. Exhibit The wise investor will select only those index funds that are avail- able without sales loads, and those operating with the lowest costs.
These costs—no surprise here! Fidelity Spartana 0. Vanguard Admiral a 0. Vanguard Regular 0. USAA 0. Rowe Price 0.
UBS 0. Morgan Stanley 0. Wells Fargo 0. Evergreen 0. Morgan 0. I assume, however, that these variations will be lower in the future, and have therefore ignored them as an element in the cost-value equation. Funds tracking a par- ticular index are—or should be—commodities in terms of their portfolios and the returns they provide.
While cost differentials may look trivial when expressed on an annual basis, com- pounded over the years they make the difference between investment success and failure. Its subsequent return can be compared with that of the original Van- guard Index Fund over the same period.
The sales commission on the Vanguard Index Fund was eliminated within months of its initial offering, and it has operated with an expense ratio averaging 0. By , the ratio had decreased to 0. In con- trast, the Wells Fargo fund carried an initial sales charge of 5. These seemingly small differences added up to a 23 percent enhancement in value for the Vanguard fund.
All index funds are not created equal. Intelligent investors will select the lowest cost index funds that are available from reputable fund organizations.
It should be your own cash cow. Some years ago, a Wells Fargo representative was asked how the firm could justify such high charges. Investors face a mind-boggling set of confus- ing choices—large cap, mid-cap, small-cap, industry sec- tors, international, single country, and so on. To make it more confusing, indexing works like a charm in every one of these areas.
A well-administered index fund is in- evitably destined to surpass the returns earned by the other investors in the market segment tracked by its index. Even though we never have complete information about the precise returns earned by investors as a group in each segment, given the relentless rules of humble arithmetic, it must work that way.
Remarkable but unsurpris- ing. While these comparisons, sorted by number of funds rather than by fund assets, have the flaws noted earlier, the message could hardly be clearer: indexing is the winning strategy. During the past five years alone, an astonishing 28 percent of all general eq- uity funds have gone out of business. But common sense tells us that for each big success, there must also be a big failure.
As it must. For, whether markets are efficient or inefficient, as a group all investors in that segment earn the return of that segment. In inefficient markets, the most successful managers may achieve unusually large returns. But never forget that, as a group, all investors in any discrete seg- ment of the stock market must be, and are, average.
Common sense tells us that for each big success, there must also be a big failure. But after all those deductions of even larger management fees that funds incur in less efficient markets, and the damaging impact of their even larger turnover costs, the aggregate lag is even wider.
So even in inefficient market segments, index funds, with their tiny costs, win again. International funds are also subject to the same allega- tion that it is easier for managers to win in supposedly less-efficient markets. But also to no avail. With indexing so successful in both more ef- ficient and less efficient markets alike, and in U. But while investing in particular market sectors is done most efficiently through index funds, betting on the winning sectors is exactly that: betting.
Largely because emotions are almost certain to have a powerful negative impact on the returns that investors achieve. Whatever returns each sector may earn, the investors in those very sectors will likely, if not certainly, fall well behind them.
For there is abundant evi- dence that the most popular sector funds of the day are those that have recently enjoyed the most spectacular re- cent performance. As a result, after-the-fact popularity is a recipe for unsuccessful investing. Betting on stock market sectors, a weak reality. Alas, while the original idea was strong, the ensuing reality was weak. What followed their introduction was a classic example of performance chasing. During the to period, the stock market was relatively placid, and value stocks and growth stocks delivered similar returns.
Then in the new economy bub- ble, growth stocks took off, earning a cumulative return by that left value stocks in the dust to March Growth Index total return, percent; Value Index total return, percent. Re- version to the mean took hold, and growth stocks plum- meted through Investor interest in the two fund styles was well balanced during the early years. Since , the two funds have achieved substantial positive returns on the standard time-weighted basis—9.
With their counterproductive timing and selection, how- ever, investors in these index funds have not come even close to matching those returns. While investors in the Value Index Fund did better, their return of 7. Since , the cumulative return of the Growth Index has been percent, versus percent for the Value Index, based on the traditional calculation of fund performance. The Growth Index Fund investor, mean- while, earned but 13 percent, and the Value Index Fund investor earned about percent.
So look before you leap in trying to pick which mar- ket sector to bet on. It may not be as exciting, but owning the classic stock market index fund is the ultimate strat- egy. It holds the mathematical certainty that marks it as the gold standard in investing, for try as they might, the alchemists of active management cannot turn their own lead, copper, or iron into gold. Just avoid complexity, rely on simplicity, take costs out of the equation and trust the arithmetic.
If so, consider the odds calculated by Michael J. While my 2 percent estimate would mean that 1 portfolio in 50 would outperform the stock market over 50 years, Mauboussin calculates the odds of a fund outperforming for 15 years con- secutively at 1 in ,, and at 1 in 31 million over 21 years.
Either way, the odds of outpacing an all-market index fund are, well, terrible. There is one thing sure about all this complexity, the total cost of all the investment management, plus the frictional costs of fairly often getting in and out of many large investment posi- tions, can easily reach 3 percent of foundation net worth per annum. The wiser choice is to dispense with the consultants and reduce the investment turnover, by changing to indexed investment in equities.
The only way for a manager to add an in- crement to that return is to make interest rate bets—for example, by selling bonds when he expects rates to go up and prices down , and then buying bonds when the re- verse is expected to happen. If you think that picking stocks and timing their purchase is hard, just imagine how hard it is to execute these same strategies successfully in the incredibly efficient precincts of the bond market.
Thus, managers of fixed income funds almost in- evitably deliver a gross return that parallels the baseline constituted by the interest rate environment. Yes, a few managers might do better—even do better for a long time—by being extra smart, or extra lucky, or by taking extra risk.
While these costs make the task of adding returns far more difficult, overly confident bond fund managers may be tempted to take just a little extra risk by extending ma- turities of the bonds in the portfolio. Long-dated bonds— say, 30 years—are much more volatile than short-term bonds—say, two years—but usually provide higher yields.
They are also tempted to reduce the investment quality of the portfolio, holding less in U. Treasury bonds rated AAA or in investment-grade corporate bonds rated BBB or better , and holding more in below-investment- grade bonds BB or lower , or even some so-called junk bonds, rated below CC or even unrated.
Since stocks represent the residual ownership or equity of corporations, the word safety is not usually associated with them. Bonds, on the other hand, represent debt. If the payments of interest that corporations and governments promise to make every six months are threatened, their ratings will be downgraded and the market value of their bonds reduced. And if they fi- nally fail to make the promised payments, they enter bank- ruptcy proceedings.
So this chapter presents the three basic maturity levels that have become the industry standard, one in each of the three major bond segments— taxable corporate and government bonds, tax-exempt mu- nicipal bonds, and U.
Treasury issues. The discussion begins with intermediate-term taxable bond funds; then turns to long-term tax-exempt bond funds; and finally evalu- ates funds investing in short-term U. Treasury notes. A finding that indexing wins should no longer surprise you.
With a year return averaging 6. But there are few other bond funds in these categories that imple- ment index or index-like strategies, and literally none with lower costs for individual investors. While the actively managed bond funds as a group earned a lower gross return than either the index fund or the index, relative cost proved to be the principal differen- tiator in net return. As a group, the portfolios of the actively managed bond funds include about 25 percent corporate and 75 per- cent U.
And so the message echoes. Among intermediate-term taxable bond funds, in terms of maximizing your return and minimizing your risk, the low-cost index fund is truly a su- perior performer. In addition, its return benefits from the absence of sales loads. Always avoid bond funds with sales loads. A typical 5 percent load would obliterate your en- tire yield for the first year. Because of complexities in the construction of municipal bond in- dexes, there are no pure index funds in this category.
Since the index provided a gross return of 5. Once again, low costs lead to higher returns. The 5. With low- costs, broad diversification, and no serious attempt to outguess the market in long-term tax-exempt bond funds, once again indexing wins. Our sweep of the bond fund arena concludes with an examination of short-term funds investing in U. Trea- sury obligations Exhibit There are few surprises here. The net return earned by the index itself 5.
Again, while the Vanguard Short-Term Government Bond Fund is not, technically speaking, an index fund, it tracks the index re- turn with remarkable precision, turning in a net average annual return of 5. The lowest cost options win again, outpacing 97 of the short-term government funds. Treasurys being Trea- surys, investment quality is virtually uniform. Both the Vanguard index fund and the index itself hold percent of their portfolios in short-term U.
Good luck! Colours won R on the family game show Win n Spin. The amount was deposited into the current banking account of the business. Receipt was issued. Bought 5 washing machines at R1 each and 3 tumble driers at R each from Runny Traders, and paid by cheque.
Colours sent a business cheque to Telkom for the following:. R for the business telephone account. R for his personal telephone account. R25 for stamps. Each of the employees received an increase of R5 per week. Stationery, R Use the information given below to complete the following accounts in the General Ledger of Winnie Pooh Services for August Equipment 7 Packing Material 1 Sundry accounts 60 Note: The following items appeared in the Sundry accounts column for August 5 Drawings R 9 Stationery 11 Vehicles 50 14 Owners personal telephone account 29 Stationery Mr Isaac Malope won R10 playing the Lotto.
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After two months of doing business, Isaac had to close his business because it was running at a loss. He lost almost all the money he had invested in the business. It is important to keep in mind that the first priority of the RDP, is to attack poverty and deprivation. In situations where people are unemployed and live without any access to services, they have to take what they can get from the environment in order to survive.
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