Mario, the difference between a closed fund and a closed end fund is that the former is a mutual fund closed to new investors whereas the CEF does not issue or redeem shares, thus trading must be done in the secondary market (eg NYSE) among investors.   A CEF too is an ETF, although the open-end ETF, such as Index Funds redeem and issue shares through the "creation unit" mechanism.

An ETN is an exchange traded fund which issues subordinated notes in lieu of common shares.These notes have maturity dates and their value changes with the value of the porftolio,  An ETN holder must contend with the creditworthiness of the note issuer, and I avoid them, even though they are becoming more popular,

In a properly diversified portfolio, movements of the S&P  and other indexes are accommodated by the inclusion of asset classes which are not closely correlated.  Some investors are good at market timing but most of us aren't

US$70 per trade seems a little heavy; must you trade only through a Maltese broker rather than elsewhere in the EU, say Italy?  I hope the gardens and woods at Buskett are still there. A true oasis in the Maltese landscape.  All of the above is just one person's opinion.  Best wishes,  Bill

Mario, don't try to get any Maltese out of me back as it's too ridiculous!

Am I sure about the S&P going down - oh my gosh - YES.  But of course, many will differ with my view. Do you think all these billions lost in the finance sector are not going to have some rippling effects?  People will start holding onto their dollars which will cause retailers to seek bankruptcy protection and lay off staff. The price of oil will hinder spending big time too.  Right now the market goes up then it goes down but overall it will take one step forward and two steps backward till it will be right down.  This volatility breaks confidence which makes people get out of the market, contributing to the downward trend. But the thing that really breaks confidence in the market is the lack of legal oversight. That is the most damaging. It takes time for the wigs to figure that one out - they like to stick to an ideology (but only when it suits)  Here's another prediction - I think that the only thing that is going to bring the U.S. out of the doldrums is investment in alternative energies so that then other countries will want to buy our intellectual property.  The overwhelming majority of cities in this country have no transportation alternatives but gasoline - our government has really shut off any other way of getting to work. And more of our dollars are being given to overseas interests.  But once investors are sure that alternative energy and carbon credits are the directions government will back, that field will blow out with new technology. Now's a good to plan a strategy!

DKP50, I simply cannot fail to continue to be amazed by the knowledge you guys seem to possess – to point me to a fund that last year returned 80% is simply extraordinary!  Are these returns really available from ETFs?  Wow!  Morningstar’s Analysts seem generally to concur with you, except for the Bruce Fund, but I assume this is only because “Father & Son” refuse to talk to them!

I should mention of course that taxable accounts are irrelevant to me being offshore, as are tax-deferred accounts (whatever they are).  I believe what you refer to 401k and Roth accounts over there are known in Europe as Personal Pension Accounts, correct?  Tax is obviously not a consideration for me, since all dividends presumably are reinvested, and I will only pay tax when (and if) I repatriate my investment.

Chamois, you must be getting so fed up with my continuous thanks, but I would consider it rude were I not to do so!  So, thanks for the education.  Your third paragraph (“In a properly diversified portfolio…”) was extremely helpful.  By this, I assume you mean I should hedge, ie choose a sector that’s like to go up to counteract my sector which is currently going down – yet that, to my inexperienced mind, sounds extremely difficult to do, but I suspect somehow, you guys are managing it.  I’d just like to know how, that’s all!

Yes, I can confirm that Buskett remains as salubrious as you remember it, and still just as welcoming!  Thanks for your input Chamois.

DangMe, no more “kliem bil-Malti” I promise!

You sure painted a veritable Armageddon there – I think I might have nightmares tonight!

May I ask you all a personal question please?

I will not be so rude and discourteous as to ask you all what you achieve on an annual basis, as that is none of my business, but if I were to ask how realistic is it for me to achieve around 10% over the next 12 months starting now, in broad global ETFs, using well-known iShares, SPDRs, a couple of Vanguard funds totalling around 7 - 10 ETFs, for around US$1m, would you reply that I am living in cloud-cuckoo land?

Thanks,

Mario

You've all gone quiet over me!

It's a simple question really - is 10% realistic, yes or no?

I, for one, don't believe there is a credible answer when applied to such a short time horizon. Over, say, a ten year period, 10% annualized, risk managed return on global investment  seems a realistic goal, but there is too much near term economic and market  uncertainty to predict even a modestly positive outcome over only 12 mo. JMO as always
 

Chamois, as usual, thanks for your reply.

Could you explain what you mean by a "... risk managed return..." please?

You obviously don't mean taking a risky path through the ETF universe, do you?

Mario

Hi, Mario.  No, what I meant was that risk correlates with reward.  Thus when you reduce risk, you reduce the potential for reward.  What one strives for, whether via ETF or other vehicles, is capital appreciation adjusted for tolerable risk.    The diversification provided by investment funds reduces risk and moderates reward toward a mean value of its contents.

In the US, the S&P 500, a broad index, has an annualized return of 11% over the past fifty years, but last year it lost money.  Same with the MSCI  EAFE. Good risk management through asset class diversification and the use of ETF, CEF and mutual funds instead of trying to pick individual winners, assures one of doing almost as well as ones benchmark in bull markets,and far better in bear markets.  The issue is ALPHA, which is defined as a risk adjusted return on investment. None of the above can be adequately measured by short time frames. Best wishes!

Really useful, really helpful and really instructive Chamois - very many thanks.  I have found your replies extremely helpful, and wish I could somehow thank you for your efforts.

Fondest regards from the Mediterranean,

Mario