Buffet vs. Hedge Funds
Nearly a decade ago, Warren Buffet made a bet with hedge fund manager Ted Seides that the S&P 500 would outperform a basket of hedge funds over a ten-year period. Recently, Mr. Seides conceded he lost the bet, with the basket of hedge funds gaining 22% while the S&P 500 rose by 85%. With this much of a hurdle, there was no way Mr. Seides could win.
This proved to be excellent fodder in Mr. Buffet’s latest investor letter, where he claimed that hedge funds, and other forms of active management was a sucker bet, and investors are better off with low cost passive index funds or ETFs.
While this makes interesting copy in the media, I believe that Mr. Buffet is over simplifying things somewhat.
Active versus Passive in Bear Markets
Active vs. Passive in Bear Markets Does active management earn its fees in down markets… The other day, I was talking with an advisor, and as it often does, the subject of conversation turned to the equity markets and the current level of valuation. Regardless of the metric, valuations appear to be above historical averages, which increases the likelihood of a market pullback. The...
Read MoreThe Best & Worst of 2013
Looking at last year’s winners and losers and how they should fare this year With 2013 now just a memory, I thought I might be interesting to take a look back at the best and worst of the year. Best of the Year According to fund research firm Morningstar, the best performing fund categories last year were: Fund Category 2013 Return Health Care Equity 49.80% U.S. Small / Mid Cap Equity...
Read MoreFund Closings as a result of the Federal Budget
In the budget announced March 21, 2013, the government proposed to eliminate the tax benefits associated with forward agreements used by some mutual funds to achieve capital gains treatment on income that would otherwise be treated as ordinary income. To do this, very simply, a fund would enter into a forward agreement with a counterparty. The forward agreement would provide the fund with a rate...
Read MoreCundill Recovery Fund
Q – What is your opinion of the Cundill Recovery Fund? A – The timing of this question couldn’t be better, given that elsewhere in this edition we highlighted the new IA Clarington Sarbit Activist Opportunities Class. This fund is in a similar space in that it has the mandate to invest in companies that are undergoing some sort of recovery situation such as reorganization,...
Read More2013 Budget Impact
Flaherty cracks down on Income Conversion and LSIFs On March 20, Finance Minister Jim Flaherty delivered the 2013 Federal budget. By most accounts, it is described as a “modest budget” in that it contains very little in the way of new spending initiatives and keeps the government on track to eliminate the $26 billion deficit over the next two years. For investors, there were a few changes that...
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