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What other tech stock to consider?
- Thread starter Sanny
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Not uncommon sentiment.
Cars Self-Drive In Nvidia, Tesla, Mobileye Q3 | Watch the video - Yahoo Finance
SebastianR
Active Member
Not perfect style replying to myself - but just to say that I have resolved the quest I was on (see above). There are two ETFs which essentially are passive / very diversified, yet without the carbon/fossil nastiness in them:
https://www.ishares.com/us/products/271054/ishares-msci-acwi-low-carbon-target-etf and
https://www.spdrs.com/product/fund.seam?ticker=LOWC
They both seem to fit the bill of what I was looking for.
I have a little invested in New Alternatives Fund. It's a mutual fund that invests in clean energy companies. They've been around a long time. I think they're completely fossil-free at this point. At one time many years ago they had a lot of natural gas with the rational that it was cleaner than other fossil fuels but they divested it all when we started fracking like there's no tomorrow. It's a small and interesting fund that's done well over the long term.
1.12% expense ratio... I just can't get over that, what's your take on high expense ratio funds like this?
SebastianR
Active Member
That's exactly my challenge: I don't believe in active management of funds at all. But I'm quite happy to apply a "no carbon" filter and index the rest...
I believe the two ETFs in the above are coming close to that. But of course I'm aware they are not quite a non-carbon version of VTI. So again, if anybody has a non-carbon VTI, I'm very happy to move some resources ;-)
Sebastian and others:
There is an excellent article out yesterday on Bloomberg about how low-fee guru John Bogle's Vanguard Funds now have achieved the critical mass necessary truly to disrupt the investment management side of Wall Street. Summarizing, the thesis is this:
Vanguard's fees are so low, and its organization so large, that the collective funds flowing to Vanguard are demonstrably affecting the top - and bottom - line of the rest of the investment world.
20-40 years ago, investment management fees of 1 - 2.5% were commonplace. Now, the mean is 0.66%. Vanguard, however, sits at 0.13%....for its $3 trillion under management. The transfer of funds into Vanguard products in 2015 alone, the article claims, amounts to $16 billion in fees that Wall Street did not collect. It's not that the $16bn went to Vanguard - it stayed with clients (what a concept!).
For evidence of Vanguard's power, the article then turned to the world of ETFs, and found that the difference of management fees in sectors where Vanguard does compete were vastly lower than in sectors where it does not have a presence - so this elephant is forcing all to dance to its ponderous weight.
Good stuff!
Oh, by the way: there's no reason to conclude that Bogle has been doing this out of sheer altruism. At $3.1trillion under management, even with Vanguard's minuscule 0.13% fee, that still comes out to an annual take of over $4bn.
To the point of your discussions: you should hope that the ETF/Index Fund in which you're interested has Vanguard also as a player, whether or not you choose the Vanguard product in which to invest.
Link here: Vanguard’s Gain Is Wall Street’s Pain as Billions Leave the Financial Industry - Bloomberg Business
There is an excellent article out yesterday on Bloomberg about how low-fee guru John Bogle's Vanguard Funds now have achieved the critical mass necessary truly to disrupt the investment management side of Wall Street. Summarizing, the thesis is this:
Vanguard's fees are so low, and its organization so large, that the collective funds flowing to Vanguard are demonstrably affecting the top - and bottom - line of the rest of the investment world.
20-40 years ago, investment management fees of 1 - 2.5% were commonplace. Now, the mean is 0.66%. Vanguard, however, sits at 0.13%....for its $3 trillion under management. The transfer of funds into Vanguard products in 2015 alone, the article claims, amounts to $16 billion in fees that Wall Street did not collect. It's not that the $16bn went to Vanguard - it stayed with clients (what a concept!).
For evidence of Vanguard's power, the article then turned to the world of ETFs, and found that the difference of management fees in sectors where Vanguard does compete were vastly lower than in sectors where it does not have a presence - so this elephant is forcing all to dance to its ponderous weight.
Good stuff!
Oh, by the way: there's no reason to conclude that Bogle has been doing this out of sheer altruism. At $3.1trillion under management, even with Vanguard's minuscule 0.13% fee, that still comes out to an annual take of over $4bn.
To the point of your discussions: you should hope that the ETF/Index Fund in which you're interested has Vanguard also as a player, whether or not you choose the Vanguard product in which to invest.
Link here: Vanguard’s Gain Is Wall Street’s Pain as Billions Leave the Financial Industry - Bloomberg Business
All the best with your investment strategy.
I am quite distrustful of professional fund managers that manage someone else's money.
In good times, some of them achieve solid returns. However, most people achieve solid returns in a bull market.
In downturns, it is fund investors that take up the downfall, more so than the fund managers. For that reason, if anyone is lucky enough to be an investor, the best investment they can make is to put some time and effort into learning how to control investment risks. It is too risky relying on someone else to take care of money.
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SebastianR
Active Member
Yep. Agree. As I said, I don't believe in active management and want to only invest passively in index funds (aside from my "gamble" with TSLA). So I certainly don't want to pay any fund manager to manage my funds.
It is a very simple argument why: If you take the whole market of investments, you could divide it into two parts: the passive funds and the active funds. As any index fund per definition achieves "market performance", passive funds are on average as good as the market return. This means that all actively managed funds are also on average achieving market return (in both cases ignoring management fees). Since we can't predict the future, and we have no way knowing which actively managed fund will come out as "winner" or "looser" i.e. above or below the return of the market portfolio, you may as well stay with the index fund and control what you can control: management fees.
If this relates to risks in investing generally, I agree. If this is about stock picking, then my argument from above applies.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
SebastianR
Active Member
Well, with the funny difference that normally "you get what you pay for" but here it is more like "you get more if you pay less" which is counter-intuitive and leads to many people wasting there money in the quest to get "the better product".
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Agreed. There's often this U-shaped demand curve, where demand can actually increase by increasing the price of a product or service, because it's percieved as more attrictive or inherently "better" because it costs more.
You'll likely also notice that funds with high managment costs are situated in fancy office buildings with gold plates, a nice reception and that the fund managers wear fancy suits etc... We humans are easily wooed by these things, to believe they would somehow be better at picking stocks.
hockeythug
Active Member
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Yes. It's very hard empirically to distinguish skill from luck - likely quite impossible.
https://www.dimensional.com/famafrench/essays/luck-versus-skill-in-mutual-fund-performance.aspx
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