Building a Winning Portfolio Of Index Funds Isn't Easy
Index funds are almost guaranteed to win. But that still leaves plenty of room for error.
As many battle-scarred investors can attest, the humble index fund is tough to beat. These know-nothing funds simply buy the stocks that make up a market index, in an effort to replicate the index's performance. That turns out to be a winning strategy because most actively managed funds fare far worse, thanks to the hefty costs they incur.
Still, despite indexing's edge in performance, building a winning portfolio of index funds is no slam dunk. Here are four common mistakes:
Feeling Blue
The most popular index funds are those that track the Standard & Poor's 500 index of large-company stocks. To understand why, just check out the performance of Vanguard Group's giant $77 billion S&P 500 index fund. In the 1990s, it outpaced 75% of U.S. stock funds.
But that performance is deceptively good. While the Vanguard fund's indexing strategy clearly helped, the fund also got a boost from the heady returns of blue-chip stocks, which easily outran smaller companies and foreign markets in the 1990s.
What if large-company stocks don't shine quite so brightly in the decade ahead? S&P 500 index funds will still stack up well against actively managed blue-chip stock funds. But they may perform poorly compared with funds specializing in smaller stocks and foreign companies.
The implication: You need to buy more than just an S&P 500 fund. I would aim to build a portfolio of index funds that gives you exposure to large stocks, smaller companies, real-estate investment trusts, developed foreign stock markets, emerging stock markets and high-quality U.S. bonds.
Lacking Commitment
How much should you invest in each of these sectors? Within reason, it doesn't much matter. For instance, you might put as little as 10% of your stock portfolio in foreign stock index funds or as much as 35%. Similarly, you might stash just 5% in real-estate investment trusts or you could go as high as 15% in REITs.
But whatever percentages you adopt, it's critical you stick with them. Over 30 years, all sectors should generate fairly decent returns. But you won't collect those returns if you commit a big chunk of your portfolio to one sector and then panic and sell at the worst possible time. That's one mistake you desperately want to avoid.
What to do? Look to own a little bit of everything, so you get the reduced portfolio volatility that comes with broad diversification. But when settling on target percentages, be careful not to allocate more to a sector than you can stomach.
Overpaying the Piper
Suppose you decide to invest half your stock-market money in an S&P 500 index fund. Which fund should you buy? One S&P 500 fund might seem pretty much like another. But in fact, there can be huge variations in the costs involved.
For instance, Vanguard 500 Index Fund Investor Shares charges just 0.18% a year, while the broker-sold Morgan Stanley S&P 500 Index Fund B Shares levies an eye-popping 1.5%. Indeed, according to Chicago's Morningstar Inc., there are 60 index-based funds with annual expenses of 1.5% or more.
Buying these high-cost index funds makes no sense. Index funds win by incurring lower costs than their actively managed competitors. If you give up that cost advantage, you are giving up one of the major reasons to index.
While Vanguard's S&P 500 fund has extremely low annual expenses, you might fare even better with iShares S&P 500 Index Fund, which charges just 0.09% a year. But there's a catch. The iShares fund is an exchange-traded index fund, which means you will incur brokerage commissions and other trading costs when you buy and sell.
Which is the best bet? If you plan to invest $20,000 or more and let it ride for 10 years, iShares S&P 500 will probably leave you with more money. But if you are investing a smaller sum, your time horizon is shorter or you foresee adding regularly to your account, I would lean toward the Vanguard fund, because you won't incur all the trading costs associated with exchange-traded funds.
Too Taxing
If you look at historical performance, index funds handily outpace most actively managed funds. That performance gap widens even further, once you figure in taxes.
Because index funds don't actively trade their portfolios, they tend to realize relatively few capital gains each year. That is good news for taxable shareholders, who have to pay taxes on any capital-gains distributions they receive.
Still, it is a mistake to assume you won't get large taxable distributions from an index fund. Unfortunately, even if you index, some investment styles almost inevitably lead to big taxable distributions, so you'll want to keep these funds in your retirement account.
"The first things you want to put in your retirement account are bonds and your REITs," says Art Canter , a financial planner in Boca Raton, Fla. "Next, you might put in your small-company stocks and after that your value stocks. Meanwhile, in your taxable account, you might buy your large-cap stocks and your large-cap international."
All the interest from your bond-index funds will be immediately taxable as income, so these funds are a clear candidate for your retirement account. Meanwhile, because REITs already get a corporate tax break on the dividends they pay out, most of their dividends won't be eligible for the new, lower dividend-tax rate. As a result, if you don't hold your REITs in a retirement account, you will have to continue to pay income-tax rates on the dividends you receive.
What about value-index funds, which buy stocks that are cheap compared with assets and earnings, and small-stock index funds? With both funds, you can get surprisingly large capital-gains distributions, because so many stocks graduate each year from the underlying indexes. Result? If you can, also try to hold these funds in your retirement account.
建立指数基金投资组合并非易事
指数基金几乎总是稳操胜券，但投资者在操作时仍存在诸多误区。
许多身经百战的投资者都知道，看上去温和的指数基金其实非常顽强。这类基金并不考虑很多，只是买入大盘指数的成份股，以模拟指数的市场表现。实践证明这种策略十分有效。由于成本较高的缘故，大多数处于积极管理之下的基金表现要比指数基金差得多。
尽管指数基金表现突出，但建立成功的指数基金投资组合并非易事。以下是四种常见的误区：
感到前途渺茫
模拟标准普尔500指数的基金最受欢迎。要了解其中的缘故，看看Vanguard Group的标准普尔500指数巨型基金就明白了。这只规模达770亿美元的基金，其90年代的收益率比一般的美国股票基金高出75%。
但这样出色的表现带有一定的迷惑性。尽管Vanguard基金追随股票指数的策略显然发挥了作用，但该基金同时也得益于蓝筹股大幅回报的推动。90年代，蓝筹股的表现显然领先于小型股和外国公司股票。
可如果蓝筹股今后十年风光不再，那情况将会怎样？答案是：标准普尔500指数基金仍然会超过积极管理之下的蓝筹股基金；但与那些专攻较小规模公司和外国公司股票的基金相比，可能就黯然失色了。
注意：你需要买进的不仅是标准普尔500指数基金。如果是我，就要建立一个指数基金投资组合，使你的投资可同时覆盖到大型股、中小型股、房地产投资信托，成熟国外市场上的股票，新兴市场上的股票以及优质的美国债券。 不能坚持到底
如何分配在各类指数基金中的投资比例，这从理论上讲并不重要。比如，国外股票指数基金在你股票投资组合中可以仅占10%，也可以占到35%。同样，你可以只保留5%的房地产投资信托，也可以让这部份占到15%。
但无论怎样分配，关键的是坚持到底。如果能坚持30年，各类投资应当都有丰厚的回报。但如果你的投资组合过于偏重某一类指数基金，然后在其表现低谷时惊慌抛售，那就无法得到这些回报了。这样的错误你一定不愿意犯。
怎么办呢？争取各类指数基金都持有一些，多样化投资能够减少投资组合中的波动。但在确定目标百分比时，注意不要让某一类指数基金所占的比例超出自己的承受能力。
管理费过高
如果你决定将自己股市投资的一半投入标准普尔500指数基金，该买入那种基金呢？标准普尔500指数基金看起来都大同小异，但实际上，其中的成本却有著天壤之别。
比如，Vanguard标准普尔500指数基金去年只收取了0.18%的管理费，而摩根士丹利标准普尔500指数B股基金的收费比率却高达1.5%。的确，据芝加哥的Morningstar Inc.统计，有60种股票指数基金管理费在1.5%或更高。
买进这些高成本的指数基金毫无意义。指数基金是靠成本低于那些进行积极管理的竞争对手而取胜的。如果你放弃成本优势，就放弃了买入指数基金最主要的原因之一。
尽管Vanguard标准普尔500指数基金年收费相当低，但如果投资于iShares标准普尔500指数基金，那就更优惠了，该基金的管理费只有0.09%。但这里面还有个"圈套"。iShare基金是上市交易基金，也就是说在你买进卖出时，要承担经纪人佣金和其他交易成本。
怎样才是最佳投资途径？如果你计划投资2万美元或更多，并在10年内任其自由波动，那iShare标准普尔指数基金应当最划算。但如果你投入的资金小，只打算短期持有，或预计经常会追加投资，那我就推荐Vanguard基金，这样可避免上市交易基金的相关成本。
高额纳税
回顾历史，你会发现指数基金表现轻而易举就超过大多数处于积极管理之下的基金。如果算上纳税优惠，这种差距还会进一步扩大。
指数基金并不频繁调整投资组合，相对而言每年几乎没有资本利得。而资本利得是必须纳税的，这样一来，对基金投资者就是有利的。
然而，认为购买指数基金总能回避大量应税收益是一种错误的认识。指数基金的有些投资方式也不可避免地会产生大量应税收益。这时，你可能就会希望将这类基金留在养老金帐户中。 佛罗里达州伯克莱顿的财务策划人Art Canter说："你首先考虑放入养老金帐户的是债券和房地产投资信托指数基金。其次是小型股指数基金，然后是价值型指数基金。同时在你的徵税帐户上，你可以考虑买入投资于国内和国外市场上大型股的指数基金。"
债券指数基金的全部利息都要立即被徵税，因而这些基金显然要进入退休金帐户。同时，由于房地产投资信托基金的派息已经享受了公司税减免，其大多数股息就没有资格享受新的、更低的股息税税率了。因此，如果你没有将这类基金加入养老金帐户，那就必须继续按照所得税税率纳税。 那买入价值型指数基金或小型股指数基金的情况又当如何呢？若买入这两类基金，你将获得比预期更多的资本利得，因为每年都有很多股票离开原来的指数，进入更高一级的指数。如果可以的话，也争取在自己的退休金帐户中持有这些基金。
