Tortoise 2, Hare 0

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Tortoise 2, Hare O
Many investors feel like you can’t beat Vanguard. Bond King Bill Gross of Pimco may agree. Especially after losing his second big title to the index juggernaut.  What happened?

huge.0.4372Ouch, again
As the recent Bloomberg title read, Gross Loses World’s Largest Mutual Fund Title to Vanguard. Vanguard’s Total Stock Market Fund is now larger than Pimco’s Total Return Fund. With investors pulling money out of Pimco at record rates, the Vanguard fund is now number one, at $251 billion.

This follows another unhappy milestone for Gross when the performance of his actively managed Total Return Fund fell far short of Vanguard’s index-based Intermediate Term Bond Fund. Again Bloomberg had the story: Gross Trails Index Fund, Misses Treasuries Rally. Our story then was Tortoise 1, Hare 0. The score’s getting worse for Bill Gross.

Do these two events make a trend? Hard to say, but we do see a clear trend toward more interest in indexing, the brand of investing that Vanguard made famous, easy and affordable. Certainly there is rising demand for index investing from mammoth investors, as we wrote about in Indexing Grows Popular with the Pros.

Fidelity jumps in
All credit to Fidelity, truly one of the world’s foremost active management firms, for recognizing and joining in the index movement.  With flagging profits, Fidelity has announced 10 passive sector ETFs. Though well behind other industry leaders in entering the index market, Fidelity joins State Street (which offers SPY, the oldest, biggest ETF) and Blackrock (the world’s largest asset manager with $4.1 trillion).

They all do it, you can too
I’ve said before that I believe that we are just at the beginning of the index investing era.  The oldest ETF is only 20 years old and Osbon Capital, to our knowledge the sole index-ETF-only boutique, is only 8 years old.  It’s early days.  There’s plenty ahead for those who want to put passive power to work.  See Passive Power for more.

Want to know more?
Give us a call at 617-217-2772 – we’d love to hear what’s on your mind


This article may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.

Nothing in this article is intended to be or should be construed as individualized investment advice. All content is of a general nature. Individual investors should consult their investment adviser, accountant, and/or attorney for specifically tailored advice.

Any references to third-party data or opinions are listed for informational purposes only and have not been verified for accuracy by the Adviser. Adviser does not endorse the statements, services or performance of any third-party vendor without specifically assessing the suitability of a third-party to a client’s or a prospective client’s needs and objectives.

An investment cannot be made directly in an index. Any securities mentioned are for illustrative purposes and may or may not be held in client accounts.

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