Three articles this week on investing in SIPS, ETFs and emerging markets.
For the past year, I've been heavily invested in so-called emerging market mutual funds. I still have some questions about how these investments actually work with the value of the dollar and such but this article is a good overview. (And advice not to invest more than 5% overseas.)
Don't Get Caught Up in the Hype Over Emerging-Market Investments
November 2, 2005 in WSJ
It's a developing story -- and it may not have a happy ending.
The International Monetary Fund forecasts that emerging-market economies will grow 6% in 2006, while the developed world plods along at less than 3%. But will this sizzling economic growth translate into dazzling stock-market performance?
The recent answer has been an emphatic yes. According to Morningstar Inc., the investment-research firm, emerging-market stock funds soared an average 56% in 2003 and 24% in 2004.Despite a rough October, these funds are up an additional 16% this year. Yet I have just 5% of my stock portfolio in emerging markets -- and I don't think it's wise to allocate too much more than that.
I've owned SIPS for a year now. Not too impressed yet but perhaps that will change?
Inflation Bond Gets Big Rate Increase
As Consumer Prices Climb, Yield Jumps
To 6.73%; Other Ways to Shield Your PortfolioNovember 2, 2005
Yesterday, the Treasury Department sharply increased the yield on its I Bond savings bond to 6.73% from 4.8% previously. The rate adjusts twice a year, based on the consumer-price index, or CPI. The new rate is more than two percentage points above the average yield on other conservative investments, such as short-term certificates of deposit and money-market mutual funds.
I have a good friend who has been patiently trying to explain ETF's to me (and to sell me a bridge over Brooklyn). This article is a nice summary/overview of the ETF/index fund debate.
The Great Race: ETFs vs. Funds
New Opportunities for Indexing
Complicate Investors' Choices;
Picking the Right Market 'Slice'November 5, 2005
But in the past few years a racy newcomer, exchange-traded funds, have started opening up significant new investment strategies. While ETFs behave much like traditional index mutual funds, they have key differences. The main one: Unlike mutual funds, they trade on an exchange, just like a stock.
