Dan Wiener Talks Fund Managers and Tax Inefficiencies
MoneyLife Market Call’s Chuck Jaffe interviewed Dan Wiener, Adviser Investments’ chairman, to learn more about his “buy the manager, not the fund” approach and Vanguard’s recently launched factor funds. Dan emphasizes the importance of coupling great active managers with low operating expense ratios. He also names two managers he’s watching: Bryan Krug, portfolio manager for Artisan High Income Fund (ticker: ARTFX), and Baillie Gifford, who currently co-manages several Vanguard funds. On the subject of Vanguard’s six new factor ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index., Dan opines that, “Factors are the bright, shiny new toy in a lot of mutual fund companies’ toy chests right now.” Just five months since inception, Vanguard’s factor funds have outperformed the market; however, investors should be mindful of tax inefficiency risksThe probability that an investment will decline in value in the short term, along with the magnitude of that decline. Stocks are often considered riskier than bonds because they have a higher probability of losing money, and they tend to lose more than bonds when they do decline..