Articles | Trellis Wealth Advisors

Active Funds Underperform in 2011

April 12, 2012

This report released by Standard & Poor’s showed that 84% of active US managers underperformed their respective S&P benchmark indices in 2011. Not surprisingly, S&P also summarizes that the only consistent data point observed over a five-year horizon is that a majority of active equity and bond managers in most categories lag their comparable benchmark indices. The S&P report cites other data points further indicting active management such as survivorship bias, style drift among managers, and underperformance during bear markets (periods which should favor active management given their ability to move to cash, or seek more defensive positions).

Link | S&P Indices Versus Active Funds (StandardandPoors.com)

Rich Managers, Poor Clients

January 25, 2012

This concise article in The Economist lifts the veil on hedge fund returns – specifically who actually reaps the profits and why even the industry’s lackluster returns since 1998 are misleadingly high. A worthwhile read that cites the eye-opening statistics compiled by a former hedge fund insider at JP Morgan.

Link | A Devastating Analysis of Hedge-Fund Returns (Economist.com)

Why You Should Rebalance

May 27, 2011

This article cites the fundamental premise behind rebalancing – to ensure your portfolio is not taking on more or less risk than you have determined is necessary to reach your goals. It also highlights the important variables to consider when rebalancing – timing, transaction costs, tax implications, and discipline.

Link | Why You Should Rebalance (CBSMoneyWatch.com)

Advisor’s Alpha

February 23, 2011

Vanguard’s paper correctly outlines both the perceived and actual areas in which advisors add value or “alpha” for their clients. Advisors tend to spend far too much time on the perceived value of market timing and investment selection, which more often than not detracts from performance. The actual value-add, on the investment side, is in developing a customized asset allocation, rebalancing, tax-efficient investing, and ensuring that investors remain disciplined and informed through tumultuous periods in the market. On the non-investment side, advisors can serve as an advocate to help individuals organize, document, and understand their entire financial situation.

Link | Advisor’s Alpha (Vanguard.com)