Investment Help

If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.

Thursday, June 17, 2010

Evidence For Low Cost/Indexed Investing

What's the evidence for low cost/indexed investing? Good question. There is lots and it is varied. We'll eventually look at most of it in one form or another in this blog. But one type I'd like to look at here is less academic and more real world. It looks at what institutions do. It mirrors my experience as an advisor for the multi-billion dollar multi-employer United Mine Workers Health & Retirement Funds in Washington D.C. during the 1980s. There we did a lot of work to try to identify the "best of the best". Consultants brought us the best managers in terms of outperforming the S&P 500. We chose the best 3. Guess what? After 5 years, their return was below or close to the S&P 500 when looked at in the aggregate. This got us to move into low cost indexing.

When you look into institutions, you realize they have large staffs of analysts to advise the Trustees. You see that they spend most of their time focused on how they can enhance investment returns. They utilize the top consultants in the investment arena. Clearly, their actions speak loudly.

So what do institutions do? Dan Solin, on page 100 of "The Smartest Investment Book You'll Ever Read", lists the following as having "over $50 billion invested to achieve market returns:

-California Public Employees Retirement System
-New York State Common
-New York State Teachers
-Florida State Board
-City of San Diego
-State of Maryland
-State of Utah
-Los Angeles City Employees Retirement Association

The list continues with educational institutions and other organization types, but you get the message.


  1. DIY Investor:

    Your story about the move to low cost indexes for the United Mine Workers is great---and what you found is so practically typical, isn't it?

    Where I work, the financial service providers complained about my seminars. And what had initially (under a different superintendent) been encouraged became discouraged. I was no longer allowed to offer seminars to the 300 employees at my workplace. Funny thing--years ago I was actually asked to start them!

    I hope that if I do a good enough job with my book, the current superintendent will read it carefully and pave the way for indexed options---or at least, my seminars on campus again.

    I just got a note from the Publishers at Wiley who are interested in my book. I'm crossing my fingers. I won't be blogging as much, because I have about 4 months to get this book written.


  2. Andrew-
    It is typical and it is a powerful argument in favor of indexing. If there would be any entity that you would expect to not index it would be the big pension funds with their staffs and resources they have available to pick the best managers.
    If you would like an extra set of eyes to look over your book for typos etc. let me know. I'm looking forward to its release.