An anecdotal case for indexing

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Anon1234
Posts: 798
Joined: Sat Feb 26, 2011 9:32 pm

An anecdotal case for indexing

Post by Anon1234 »

As a long term renter I regularly get mail for previous tenants, likely because the USPS mail forwarding expires. When I get mutual fund reports that aren't sealed I flip through them (ie not sealed by the sender, I don't mean a ripped open package). Mutual fund annual reports have arrived in 3 of the houses I rented. All 3 of those have made me feel sorry for the investment selection that the previous tenant made. This is certainly anecdotal but I thought I share and post my confirmation bias right here for your benefit and your own confirmation bias. Enjoy!

Today I got 2 mutual fund annual reports.
1) Columbia Small/Mid Cap Value Fund, subtitled "formerly Columbia Mid Cap Value Opportunity Fund"
2) Columbia Diversified Equity Income Fund

1)Columbia Small/Mid Cap Value Fund
Performance Summary
Fund return : 16.73% (exlcuding sales charges)
Benchmark return : 22.01% (Russell Midcap Value Index)
Paraphrased commentary : We made a bunch of good investments that outperformed. Those were outweighed by underperforming investments we made.
Paraphrased Return chart : Zero of 11 classes of this fund has beaten the benchmark in any of the 1, 5, or 10 year periods.
Paraphrased discussion :
-We recently changed the fund name, fund benchmark and fund "investment universe" (ie morningstar style box).
-We underperformed, but the absolute returns were "robust."
-We changed management during the last year, and that caused 110% turnover to implement the new management's stock selections.
-We expect the funds returns "...to continue to be driven by our bottom-up stock selection process..."
Expenses
The various fund classes charge between 0.74% and 1.99% ER.
Expenses have gone up slightly since the new management took over.
We charge up to 5.75% sales charges.
100% of distributions were QDI (a nice surprise)

2) Columbia Diversified Equity Income Fund
Performance Summary
Fund return : 17.45% (exlcuding sales charges)
Benchmark return : 19.60% (Russell 1000 Value Index)
Paraphrased commentary : We made a bunch of good investments that outperformed. Those were outweighed by underperforming investments we made.
Paraphrased Return chart : Zero of 11 classes of this fund has beaten the benchmark in any of the 1 or 5 year periods. 8/11 beat the index in the 10 year period.
Paraphrased discussion :
-There is nothing interesting in 2 single-spaced pages of text.
Expenses
The various fund classes charge between 0.60% and 1.83% ER.
New management hasn't increased expenses.
We charge up to 5.75% sales charges.
100% of distributions were QDI (a nice surprise)
Alex Frakt
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Re: An anecdotal case for indexing

Post by Alex Frakt »

Someone reported this post because they assumed the OP broke US law by opening someone else's mail. I'm responding here because this is a common misconception that would likely result in additional reports for the same thing.

Stealing mail is a violation of federal law (18 USC 1708), but federal courts have found that you are not stealing it if the mail was addressed and delivered to your address. For example, United States v. Anton, 547 F. 2d 493
Once an item is delivered to the address indicated by the sender and lawfully received at that address, the item ceases to be in the mail and the protection which section 1708 provides terminates.

Note that taking something of value from the mail that is meant for someone else even if it has your address on it is is likely to be a crime in itself, but that is clearly not the case here.
Topic Author
Anon1234
Posts: 798
Joined: Sat Feb 26, 2011 9:32 pm

Re: An anecdotal case for indexing

Post by Anon1234 »

I'm glad to see the case law supports my application of the golden rule.

I also appreciate that the reporting BH did so privately instead of making a public accusation.
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vankleef
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Re: An anecdotal case for indexing

Post by vankleef »

I appreciate the intent of the OP and also feel sorry for the tenant who invested in the Columbia funds. I wonder who are the other investors who have brought the two funds to a combined total of over 4 billion dollars? I welcome them and their money to Vanguard, where they can help keep costs down or the rest of us.

Source, Yahoo! Finance:
Columbia Small/Mid Cap Value, Net Assets: 1.41B
Columbia Diversified Equity Income, Net Assets: 2.73B
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