If you decide to add REITs to an existing portfolio of index funds, we are really talking about adding real estate in excess of its market-cap weights, as described above. If REITs really are a distinct asset class, generating distinct returns, there may be some logic to overweighting them. But before you go all in, let’s unpack that assumption.
If you’ve got a fair amount of common sense – and you must, if you’re following my Common Sense Investing series – you probably already know that perfection is hard to find. In other words, in the search for solid answers to life’s greatest questions, you’ll usually find a lot more shades of gray, than pure-black or all-white.
Fees are important to investors. In most cases, lower fees increase the likelihood of a positive long-term investment outcome. Index funds globally have seen enormous growth in the past decade. That growth (and the competition to capture it) have resulted in fees literally going to zero on some index funds.
Everyone likes to believe they’re smart consumers. That’s probably why the term “smart beta,” also known as “factor investing,” is so hot right now. “Stupid beta” probably wouldn’t attract many takers.
So what is factor investing, and are you smart to use it? That’s what today’s post and related video are all about
We may have just witnessed the longest bull market in US market history. There is some disagreement on the definition of a bull market, but no matter how it is defined it is clear that the S&P 500 has been rising without too much interruption for a long time. When the market is rising, it tends to hit levels that have never before been seen.
Charley Ellis was on the Capital Allocators podcast with Ted Seides last week. Charley has been in the investment management business since the early 1960s. Today he is one of the most vocal proponents of index funds as the most sensible investment for most people.
I am far from being a long-tenured veteran of the financial services industry. In 2007, when the last big drop in financial markets began, I was studying mechanical engineering on a full athletic scholarship. I have no recollection of worrying about the market; all of my expenses were covered as long as I met my athletic and academic obligations (which I did). As far as I could tell, I had financial certainty in my life.