Similar Mutual Funds and ETFs

Comments on “Tips for Choosing the Right Funds for Your Needs,” by Charles Rotblut, CFA, in the February 2023 AAII Journal:

The logic in this mutual fund versus exchange-traded fund (ETF) article is accurate but incomplete and oversimplified. It is narrowly applicable to situations where there is both a mutual fund and an ETF alternative for the same investment. My decision process doesn’t start with fund structure; it starts with my mix of asset classes, which is 50% equities, 25% bonds and 25% preferred stocks. My equity portfolio is composed of 80% passive index ETFs and 20% active mutual funds. My bond portfolio is composed of 80% passive index ETFs and 20% three- to five-year individual bonds and certificates of deposit (CDs). My preferred stock portfolio is composed of 100% closed-end funds traded on the New York Stock Exchange (NYSE).
—Gary J. from California

Vanguard index mutual funds can be converted to ETFs without causing a taxable event because their ETFs are a separate share class. This is not the case for most other fund companies.
—John L. from New Jersey

One can observe the gradual but sure trend of the progressive conversion of mutual funds into ETFs. There are obviously quite a few reasons for this. I hope the trend will continue.
—Sneha J. from India

Millionaires’ Assets

Comments on “Millionaires Worry $1 Million Is Not Enough for Retirement,” by Sean Murphy, in Dispatches in the February 2023 AAII Journal:

“This group’s median total assets is $2 million, but their median retirement savings is just $625,000.” I don’t know about you, but my retirement savings are indistinguishable from my total assets. Mine are comparatively low because of contribution limits when I was working. Now, I will use assets from whatever source for retirement spending.
—Carey C. from New Jersey

Carey, a possible reason for the discrepancy between retirement savings and total assets is that total assets could include some assets that do not normally fall under the rubric of retirement savings, such as a residence, other real estate, trust funds in the names of others, etc. For example, I do not count the market value of my residence as retirement savings since I do not intend to sell it.
—Barry J. from Texas

Technical Analysis Advice

Comments on “Technical Analysis for the Long-Term Investor,” by Jenna Brashear, in the January 2023 AAII Journal:

I’ve been an investor since age 16. The best technical analysis advice I heard was from Alan Shaw at Smith Barney, circa 1995: “In price there is knowledge.” So, price does represent the opinion of the market at the moment. Sometimes the market goes crazy (think Mr. Market, occasionally manic or depressed, described by Benjamin Graham), then opportunity presents itself. Never ignore the price unless your time horizon is infinite.
—Neil S. from Texas

Using Donor-Advised Funds

Comments on “Online Exclusive: What Are Donor-Advised Funds?,” by Matthew Bajkowski, in the December 2022 AAII Journal:

Thanks for the article. My wife and I have used a donor-advised fund with Fidelity Charitable for about six years and have been pleased with the ease of contributing to it and granting to charities (the majority of those we contribute to are in the Fidelity database). The article implies that noncash assets (i.e., mutual funds and ETFs) are contributed to the donor-advised fund without being sold. This is not the case with Fidelity Charitable. They are converted to cash and can be invested in a limited set of funds available.
—Robert G. from Ohio

S&P 500 Sector Weights

Comments on “The Benefits of Building Your Own S&P 500 Portfolio Sector by Sector,” by Craig L. Israelsen, Ph.D., in the November 2020 AAII Journal:

I played with this during 2021 and 2022 with favorable results. I was deficient in a few duties: 1) I targeted the balance percentage as per Table 1, but not precisely; 2) I overweighted newsworthy sectors during the year as I saw opportunities while underweighting on the contrary; and 3) I took advantage of multiple entries and exits to capture the sway of general market ups and downs. Excellent results overall relative to the S&P 500 index. Where do we get updated sector weightings for Table 1 for each new year?
—Larry B. from Louisiana

Craig Israelsen responds:
The S&P 500 sector weights can be found at: www.spglobal.com/spdji/en/indices/equity/sp-500/#overview. Once at the site, scroll down to the Documents section in the middle of the page, where you can download the Factsheet PDF. The monthly updated sector weights can be found on page 5 of the Factsheet.