The main difference between index funds investing today and in Graham’s time are the fees which in some cases were up to 9% entry fee back then while now you can buy a market fund with a yearly asset management fee of 0.04%. Further, at his time there weren’t any actual index funds that are the key investment vehicle at the moment, especially if an ETF.
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A decade ago, no one talked about tail risk hedge funds, which were a minuscule niche of the market. However, today many large investors, including pension funds and other institutions, have mandates that require the inclusion of tail risk protection. In a recent interview with ValueWalk, Kris Sidial of tail risk fund Ambrus Group, a Read More
The Intelligent Investor And Investment Funds
Good day fellow investors. We continue with our summary of Ben Graham's The Intelligent Investor. Here it is. Great book I think it's the key book for investors especially those who want to learn and invest for the long term. And today we'll discuss Chapter 9 investing in mutual funds investing in investment funds. The first note is that index funds didn't really exist when Gramm wrote the book. So just 50 years ago index funds didn't exist. And that's something to keep in mind because index funds are a new product. Vanguard index funds were founded in 1976 and they didn't get any traction until the beginning of the 1980s. And that's it exactly when interest rates started to go straight down. So index funds have benefited from declining interest rates that raise asset prices and that's something to keep in mind over the long term. We'll discuss what Graham discusses about funds and investing in funds and then tried to put his perspective in the modern age. He's not against I think he would not be against against investing in index funds asset P 500 and so but there is always a way to do that which is coherent to what Graham has been saying in the past videos. The first thing that Gramm didn't have is zero point zero a 4 percent commission index funds Ingraham's times funds Head entry fees of 9 percent and then huge management fees to 20 was a bargain then.
So he simply says that that's too much and the only way you can you should invest in such funds is to invest in closed and funds at a bargain at a discount to net asset value approach and find where people cannot really invest more easily. Fund like Berkshire so there is no new money coming in. So when it trades at a discount to net asset value then you're investing Berkshire people that have invested in 2009 did very well with Berkshire and another fund that is trading now like that is birching from Bill Ackman. But I have discussed in the video. So that's also an idea because then yes they have their fee but you're already buying something at the margin of safety at a discount which is how brand loves to invest. One thing that he discusses and he gives us this quote I don't know how to say it in French but it means the more it changes the more it is the same. And that's the human attitude to jump in on a train that's doing well when an fund is doing good good rising rising rising people start when it's going high. When it goes higher putting more and more money into that fund which gives it further strength to go higher and higher. But that can be sustained as long as people continue to put money in it. And that's exactly what I think is my perspective on index funds. They have been doing good over the past four to five years. People are now brainwashed to invest only they are they're there and they keep.