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US public companies (1976 – 2016)

The following chart and table reflect the  reduction in the number of public companies included in the total US stock market over the forty year period between 1976 and 2016. The most commonly cited factors in reducing the number of

Posted in Market statistics

Vanguard mid cap index fund tracking error

Tracking error is the ultimate measure of judging an index fund manager’s performance. Since an index manager does not engage in security selection with an index fund, it is the manager’s transactional skill which distinguishes performance. How well the manager

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Posted in Market statistics, Vanguard

Vanguard small cap index fund tracking error

Tracking error is the ultimate measure of judging an index fund manager’s performance. Since an index manager does not engage in security selection with an index fund, it is the manager’s transactional skill which distinguishes performance. How well the manager

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Posted in Market statistics, Vanguard

Vanguard US large cap index fund tracking error

Tracking error is the ultimate measure of judging an index fund manager’s performance. Since an index manager does not engage in security selection with an index fund, it is the manager’s transactional skill which distinguishes performance. How well the manager

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Posted in Market statistics, Vanguard

Vanguard investment grade bond fund tracking error

Tracking error is one means of measuring active manager performance against an appropriate market index. Vanguard’s investment grade bond funds are actively managed, defined asset class funds. The funds include three bond funds structured across three bond maturity levels: short,

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Posted in Bonds, Market statistics

Vanguard active government bond fund tracking error

The following tables provide historical annual tracking error data for Vanguard actively managed bond funds. Tracking error is one means of measuring active manager performance against an appropriate market index. Vanguard’s U.S. government bond funds are actively managed, defined asset

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Posted in Bonds, Market statistics

Investing in the World – Part 3

This article is the third part of a study looking at global and domestic investing from the perspective of local investors.

In Part 1 and Part 2, we took the position of a local investor in one of 16 countries of interest, and we explored somewhat extreme positions of either investing 100% global or 100% domestic. It is now time to try a more balanced view of things, and study portfolios mixing global and domestic investments. We will notably look at the mitigation this could bring to the countries having fared the worst, but also consequences for countries having fared better. Of course, it is easy to look at such numbers in hindsight and draw hasty conclusions, so let’s keep in mind that nobody could have predicted winners and losers ahead of time.

Posted in Asset allocation, international stocks, Investing, Market history, Market statistics, Portfolios

Investing in the World – Part 2

Many North American investors tend to look carefully at historical returns in the US and in Canada, and draw various conclusions. Occasionally, some references are made to Japan and the UK, and few people look any further. The world changes though. The UK was undoubtedly the world economic leader at the end of the 19th Century, while the US clearly dominates nowadays. Japan was on a roll, had a bigger market capitalization than the US in the 80s, and yet badly faltered since then. The world changes in ways we cannot predict, and it would be naive to assume that several decades from now, the situation will be similar to today’s environment. One thing we can do to get some perspective, is to try to draw some analogies with what happened in a larger sample of countries.

This article focuses on the historical returns from 16 developed countries, looking from the perspective of a local investor, and assuming a strong home country bias to begin with (i.e. solely using domestic stocks and domestic bonds). We will look at more diversified portfolios mixing domestic and global investments in Part 3.

Posted in Asset allocation, international stocks, Investing, Market history, Market statistics, Portfolios

Under the hood – Vanguard US stock index funds

Vanguard issues annual reports for the firm’s international and global index funds on October 31 of each year. The reports provide information that can highlight some of the underlying conditions affecting a fund’s future capital gains distribution outlook; an indication of a fund’s foreign tax credit; the level of security lending in each fund, and […]

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Posted in indexing, Market statistics, Vanguard

Investing in the World – Part 1

True Bogleheads know the power of diversification. And yet, many such investors (including John Bogle himself!) are reluctant to diversify beyond domestic investments. Japanese investors could have perceived the same thing, with a remarkable run in the 80s in terms of market capitalization (nearly half of the world, higher than the US at some point) and in terms of stock returns. Unfortunately for Japan, as discussed in a previous blog article, this impressive success was followed by the worst equity crisis in modern history. This study about Japan also showed how some level of international diversification would have helped a local investor to mitigate this extremely painful crisis.

This raised an interesting question. Could one simply invest in the world, using global stocks and global bonds? And if this proves unsatisfying, is there a proper middle ground between domestic and global allocations?

Posted in Asset allocation, international stocks, Investing, John Bogle, Market history, Market statistics, Portfolios
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