A Case Study in Currencies
In my last post, I explained that US-listed ETFs that hold overseas stocks do not expose Canadians to fluctuations in the US dollar. This is an important idea to understand if you’re comparing ETFs th [...]
Currency Hedging in International Funds
Currency hedging can be confusing for investors who use index funds and ETFs that hold foreign stocks or bonds. The basic idea, which I have written about before, is not terribly hard to understand. I [...]
Where Do Returns Come From?
You don’t need a lot of mathematical horsepower to be a Couch Potato investor. Indeed, simplicity is one of the strategy’s virtues: just keep your costs low, diversify widely, and stick to the plan. B [...]
The Making of a Couch Potato
I know very few people who began their investing lives as Couch Potatoes. Most started out in mutual funds or as stock pickers and, somewhere along the line, realized they were overpaying and underper [...]
Can Your Funds Outperform Over a Lifetime?
Advocates of active management admit that only a minority of mutual funds will outperform their benchmarks, but they argue there is still a significant probability of success. According to the data Ri [...]
Beating the Market Is a New Idea
Today we take it for granted that virtually all mutual funds and stock pickers are trying to earn higher returns than the overall market — or at least earn the same returns with lower risk. But Rick F [...]
A DRIP in the Bucket
One of the downsides of using ETFs—as opposed to index mutual funds—is that dividends and interest are not automatically reinvested. Instead, they are paid in cash, where they often sit idly in your b [...]
Does Rebalancing Boost Returns?
Rebalancing your portfolio has two potential benefits. The first is that it helps control risk by keeping your asset allocation more or less consistent. The other advantage—assuming you have the disci [...]
How to Lower Your Rebalancing Costs
Last week I looked at why you should rebalance your portfolio, and considered the question of how often to do it. The frequency with which you rebalance often comes down to cost. If you’re using index [...]
How Often Should You Rebalance?
In my previous post, I looked at the reasons why investors should occasionally rebalance their portfolios. When a portfolio contains both fixed-income and equities, rebalancing is mostly about risk ma [...]
