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The Other Side of the Index Fund Coin

Top 5 of the Week of April 3

Heading up the Top 5 this week, AQR’s Clifford Asness ‏explores the impact of the upcoming new Fiduciary Rule. Ben Carlson plays devil’s advocate about index funds for his blog, A Wealth of Common Sense. And Angelo Calvello, The Dissident at the Institutional Investor, looks at the asymmetry between asset owners and asset managers.

Michael Kitces of looks at the ever evolving optimal retirement income strategy. And author Daniel Solin reveals the headlines we’ll never see in financial media for his own blog…

Unexplored Consequences


  • The new Fiduciary Rule—extending coverage over a wider array of investment advisors who give advice on retirement plans—was set to begin this month in April, but has been pushed back now till June
  • That advisors must only act with their client’s best interest at heart seems, on the surface, a positive
  • But the marketplace may potentially be neutered by these new fiduciary standards as fiduciaries attempt to stifle investing in line with these regulations; suffocating any innovation

What consequences do you foresee of the new Fiduciary Rule? Share your comments in the section below

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The Other Side of the Index Fund Coin


  • Index funds have grown very popular, but that’s not to say they are without their downside
  • Even in index funds there are investors that panic at the first sign of trouble and sell; amplifying volatility and increasing risk for all
  • There is no longer just one traditional type of index fund, as more and more index-like products become available the amount of choice is overpowering
  • Index funds are not the be-all and end-all solution to investing—they’re also not necessarily the right strategy for everyone

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Like It or Lump It


  • There is little to suggest nowadays that asset owners hold an equal stance with asset managers—no matter what they’d prefer to believe
  • The imbalance is demonstrated clearly in “misaligned fee schedules and liquidity terms,” and by some asset managers actively eliminating references to fiduciary duty
  • A fairly recent occurrence, this shift in the power dynamic between asset owner and asset manager essentially suggests to the owner that their interests are no longer a primary concern of the manager

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Investing Evolution


  • Portfolio strategies have altered their focus on income sources since the 1950s, starting with bonds, then dividends, before a “total return” approach to include capital gains
  • As capital gains are volatile, the modern view on retirement portfolios has evolved to include reliance on retirement principal as an income source too
  • Year to year, you won’t be able to predict which area your retirement income will come from but it relies on the four pillars—interest, dividends, capital gains, and principal

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If Financial Papers Told the Truth


  • “It would be more accurate to call ‘predictions’ by our experts ‘random guesses'” No matter where you’re getting your expertise from, no one can accurately predict the future of the market
  • “Overweighting your portfolio in gold is dumb, no matter how frightened you are” Volatility can be scary but gold or cash will offer you no security either
  • “You’d be better off not watching or reading us” Cutting through the noise to real worth with financial media is near impossible, just steer clear of it all

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Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form—and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.


Anything you would like to discuss about this week’s top 5? Do you have another favorite that isn’t mentioned here? Feel free to add it below. Let’s start a discussion in the comments section!

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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article. The Become a Better Investor Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.