Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:iShares Tries to Capture Buffet's Magic Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, August 26, 2013

iShares Tries to Capture Buffet's Magic

News summary by MFWire's editors

Morningstar's Samuel Lee covered a new BlackRock [profile] iShares fund, MSCI USA Quality Factor that hopes to capture some of Warren Buffett's magic. However, Lee argues that the product proves to be a "pale imitation" of the real thing.

The fund bases its rules on Buffet's acquisition criteria, such as demonstrated earnings power, business earning good returns on equity while employing little or no debt, to select stocks, Lee writes. The rules are simpler however, such as high return on equity, low debt/equity ratios, and low variability in their year-over-year per-share earnings growth over the trailing five years.

However, it can't manage to meet Buffet's standards, because as Lee writes, "The best that can be said is that if Buffet buys the needle, the index buys the haystack."

Lee looked at MSCI data for quality stocks, finding that they underperformed the broad market by over 20 percent from 1975 to 1980. However, he wrote that if one looks at cumulative returns of MSCI Quality from 1981 to April 2013, quality stocks can gain a consistent performance edge over the business cycle as long as it doesn't trade at extreme valuations, Lee writes.

Compared to Vanguard's [profile] Dividend Appreciation fund, or as Lee has named it "Buffet in a Box," it's more expensive and Vanguard offers a well-managed and liquid fund. The iShares fund is competitive however, as it offers purer exposure and greater transparency, Lee writes.

To read more, click here.  

Edited by: Casey Quinlan


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

0.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2019: Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly




©All rights reserved to InvestmentWires, Inc. 1997-2019
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use