SensibleInvesting.tv recently released a free documentary about the fund management industry and the effect of their high fees on the returns of everyday citizens. “How to Win the Loser’s Game” includes interviews with Vanguard founder John Bogle, Nobel Prize-winning economists Eugene Fama and William Sharpe, author and wealth manager Larry Swedroe, amongst many others. While the publisher is UK-based, most of the concepts are widely applicable to all fund management. The film is broken down into 10 different parts, each about 8 minutes long.
If you are a visual learner and rather watch an educational video than read a book, this documentary is definitely for you. The brief episodes gradually cover the benefits of a low-cost, long-term, low-maintenance, diversified investment strategy. Here’s the trailer, which ends with links to all 10 episodes.
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thanks for forwarding. I just sent it to a friend of mine who is currently investing in actively managed funds (1.5% ER). The video was very well done.
I work for one of the largest Defined Contribution (401k, 403b, 457, etc…) recordkeeping firms in the US. I work behind the scenes managing the the relationship with the plan sponsor (employer). It blows my mind how the decisions are made about which mutual funds end up in the investment lineup of some of the largest employer-sponsored plans in this country. The way I see it, ALL employer-sponsored plans should have just a few investment choices that track broad indices… Total US Stock Market Index, Total Int’l Stock Market Index, Total US Bond Market Index, Conservative Index that tracks short-term US Treasuries, as well as Age-based Target-date Fund (TDF) choices using these as the underlying investments. These investments would have razor thin expense ratios (very much like the Thrift Savings Plan for government employees). Then, these plans would also have a Self-Directed Brokerage (SDBA) component. For those who don’t know, this is a brokerage window that you can move money into and purchase almost anything… Stocks, ETF’s, Bonds, Mutual Funds, Options, you name it! This way, non-savvy participants could use the age-based TDF and be just fine (not to mention paying super low fees). Savvy participants (or those who THINK they are savvy 🙂 could move a portion of their assets to the SDBA and invest in ANYTHING! The SDBA has commissions for trades, but that’s part of the game.
Fidelity BrokerageLink allows you to trade no-load/NTF funds. No commission on Fidelity index funds either. I am not sure if this was negotiated by my employer or is for any BrokerageLink account linked to a 401K plan.
I have found Fidelity Spartan funds as a good replacement for low-cost Vanguard fund if your employer forces you to use Fidelity (I have worked at 4 employers – all required fidelity for 401K account). I pretty much ignore the high ER options from my 401K plan and use BrokerageLink to buy low cost, no-load, no commission Fidelity Spartan index funds.