Latest news with #passiveinvesting
Yahoo
a day ago
- Business
- Yahoo
Warren Buffett Says to Buy This Kind of ETF. One Could Turn $1,000 Per Month Into $252,000 in 10 Years.
Key Points Warren Buffett is a phenomenal stock picker, but he recommends most people adopt a passive approach. Investors who use a dollar-cost averaging strategy could reap huge financial gains over the long term. The S&P 500's valuation is high, but that shouldn't stop investors from putting money to work. 10 stocks we like better than Vanguard S&P 500 ETF › Warren Buffett is viewed as one of the greatest investors ever. That's because his expertise at capital allocation while running Berkshire Hathaway has resulted in a tremendous track record. The conglomerate has returned nearly 20% annualized for about six decades. While the average investor wants to emulate the Oracle of Omaha's success, even Buffett says that the best course of action for most people is to take a totally different approach. At Berkshire's 2021 annual meeting, he said that buying an S&P 500 index fund is a smart way to benefit from the stock market's growth over time. And even small sums of money can balloon into a massive amount with patience and discipline. Following Buffett's advice, investors should consider buying one Vanguard exchange-traded fund (ETF) that could turn $1,000 per month into $252,000 in 10 years. Image source: Getty Images. Dollar-cost averaging mixed with compounding The stock market has had a wonderful run in recent memory. In the past decade, the S&P 500 index has produced a total return of 255%, a figure that assumes dividends were reinvested. That translates to an annualized return of 13.5%, well ahead of the index's long-term average of a 10% yearly gain. Investors can buy the Vanguard S&P 500 ETF (NYSEMKT: VOO) to play this trend. It tracks the performance of the stocks in the S&P 500 and it's offered by a very reputable firm that not only has trillions in assets under management, but that's been around for five decades. That should give investors some peace of mind. While the past never guarantees what will happen in the future, if the next 10 years looks like the last 10, investors who allocate $1,000 on a monthly basis to the Vanguard S&P 500 ETF over the next 10 years ($120,000 total) would see their balance reach a whopping $252,000 in the summer of 2035. This is a dollar-cost averaging approach, which requires investors to invest a certain amount at a consistent interval no matter what the market is doing at that particular time. It allows investors to take advantage of different entry valuations. The Vanguard S&P 500 ETF has an expense ratio of only 0.03%. I'm sure this is another factor that Buffett appreciates, as he has a disdain for high-priced money managers that tend to underperform the market.
Yahoo
5 days ago
- Business
- Yahoo
Invesco Aims to Unlock QQQ's Hundreds of Millions in Profit
(Bloomberg) -- It's a quirk in the booming world of passive investing: Famed tech fund QQQ is the most profitable offering in the $11.7 trillion ETF industry, but Invesco Ltd. earns virtually nothing from running it. Now the asset manager is asking shareholders to change that. The Dutch Intersection Is Coming to Save Your Life Advocates Fear US Agents Are Using 'Wellness Checks' on Children as a Prelude to Arrests Mumbai Facelift Is Inspired by 200-Year-Old New York Blueprint LA Homelessness Drops for Second Year Manhattan, Chicago Murder Rates Drop in 2025, Officials Say Invesco filed a proxy statement with the Securities and Exchange Commission on Thursday asking owners of the Invesco QQQ Trust Series 1 for their blessing to convert it into an open-ended fund from a unit investment trust, a little-used structure dating back to the birth of the first exchange-traded funds in the 1990s. It's a seemingly small ask with enormous consequences for Invesco. With $355 billion in assets and a 0.2% expense ratio, a back-of-the-envelope calculation shows that QQQ generates roughly $711 million in annual fee revenue — more than any other ETF, data compiled by Bloomberg show. But in its current setup as a unit investment trust, the bulk of that is divided between the fund's trustee — the Bank of New York Mellon — and the provider of the underlying index, which is Nasdaq. As mandated by the fund's prospectus, any remaining revenue must be spent on marketing QQQ. That leaves essentially nothing for Invesco, the fund's sponsor. Theoretically, that dynamic would change if shareholders approve the firm's request. And that would be a win-win for both Invesco and QQQ holders, according to Bloomberg Intelligence. 'They have basically been running this fund, which is the greatest ever, as a charity,' said ETF analyst Athanasios Psarofagis, referring to QQQ's nearly 1,260% return since its 1999 inception. 'If they can re-purpose that, it could free up revenue to invest in other areas, like new products.' Converting into an open-ended fund may open the door to changing the revenue breakdown, according to Psarofagis. Invesco shares rose as much as 11% on Friday to the highest level since February. Invesco will lower QQQ's expense ratio by two basis points to 0.18% if the item, along with two others, are approved, according to the filing. Should the vote pass, Invesco will also replace BNY Mellon as the fund's trustee with a board of individuals, and appoint Invesco Capital Management as QQQ's investment adviser, a Friday press release said. Unit investment trusts don't have investment advisers, so no firm is currently performing that role. The firm is calling for a special meeting on Oct. 24 to hold the vote. Invesco declined to comment on Thursday beyond the filing. (Updates with Friday's share move for Invesco and press release.) What the Tough Job Market for New College Grads Says About the Economy How Starbucks' CEO Plans to Tame the Rush-Hour Free-for-All Godzilla Conquered Japan. Now Its Owner Plots a Global Takeover A Rebel Army Is Building a Rare-Earth Empire on China's Border Why Access to Running Water Is a Luxury in Wealthy US Cities ©2025 Bloomberg L.P. Sign in to access your portfolio
Yahoo
6 days ago
- Business
- Yahoo
Invesco Aims to Unlock Hundreds of Millions in Profit From QQQ
(Bloomberg) -- It's a quirk in the booming world of passive investing: Famed tech fund QQQ is the most profitable offering in the $11.7 trillion ETF industry, but Invesco Ltd. earns virtually nothing from running it. Now the asset manager is asking shareholders to change that. The Dutch Intersection Is Coming to Save Your Life Advocates Fear US Agents Are Using 'Wellness Checks' on Children as a Prelude to Arrests LA Homelessness Drops for Second Year Manhattan, Chicago Murder Rates Drop in 2025, Officials Say Invesco filed a proxy statement with the Securities and Exchange Commission on Thursday asking owners of the Invesco QQQ Trust Series 1 for their blessing to convert it into an open-ended fund from a unit investment trust, a little-used structure dating back to the birth of the first exchange-traded funds in the 1990s. It's a seemingly small ask with enormous consequences for Invesco. With $355 billion in assets and a 0.2% expense ratio, a back-of-the-envelope calculation shows that QQQ generates roughly $711 million in annual fee revenue — more than any other ETF, data compiled by Bloomberg show. But in its current setup as a unit investment trust, the bulk of that is divided between the fund's trustee — the Bank of New York Mellon — and the provider of the underlying index, which is Nasdaq. As mandated by the fund's prospectus, any remaining revenue must be spent on marketing QQQ. That leaves essentially nothing for Invesco, the fund's sponsor. Theoretically, that dynamic would change if shareholders approve the firm's request. And that would be a win-win for both Invesco and QQQ holders, according to Bloomberg Intelligence. 'They have basically been running this fund, which is the greatest ever, as a charity,' said ETF analyst Athanasios Psarofagis, referring to QQQ's nearly 1,260% return since its 1999 inception. 'If they can re-purpose that, it could free up revenue to invest in other areas, like new products.' Invesco will lower QQQ's expense ratio by two basis points to 0.18% if the item, along with two others, are approved, according to the filing. The firm is calling for a special meeting on Oct. 24 to hold the vote. Converting into an open-ended fund may open the door to changing the revenue breakdown, according to Psarofagis. Invesco declined to comment beyond the filing. What the Tough Job Market for New College Grads Says About the Economy How Starbucks' CEO Plans to Tame the Rush-Hour Free-for-All Forget DOGE. Musk Is Suddenly All In on AI The Quest for a Hangover-Free Buzz How Hims Became the King of Knockoff Weight-Loss Drugs ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
6 days ago
- Business
- Bloomberg
Invesco Aims to Unlock Hundreds of Millions in Profit From QQQ
It's a quirk in the booming world of passive investing: Famed tech fund QQQ is the most profitable offering in the $11.7 trillion ETF industry, but Invesco Ltd. earns virtually nothing from running it. Now the asset manager is asking shareholders to change that. Invesco filed a proxy statement with the Securities and Exchange Commission on Thursday asking owners of the Invesco QQQ Trust Series 1 for their blessing to convert it into an open-ended fund from a unit investment trust, a little-used structure dating back to the birth of the first exchange-traded funds in the 1990s.
Forbes
08-07-2025
- Business
- Forbes
Active vs. Passive Investing: Which Is Best For Your Goals?
When planning your financial future, you can use active investing and passive investing based on your specific financial goals, risk tolerance, and the level of engagement you want. When planning your financial future, you can use active investing and passive investing based on your specific financial goals, risk tolerance, and the level of 'hands-on' engagement you want with your investments. Let's explore the pros and cons of each and how they match different financial goals. What Is Active Investing? Active investing involves making specific investments—buying and selling stocks, bonds, or other assets—with the goal of outperforming a market index (like the S&P 500). This strategy typically involves: Active investors believe that with the right insight, they can beat the market. While there is potential for higher returns, this strategy is not without its risks. Due to frequent trading, it typically comes with higher fees and increased taxes. What Is Passive Investing? Passive investing is a buy-and-hold approach where investors seek to replicate the performance of a specific index, rather than beat it. This is most commonly done through index funds and ETFs. Passive investors benefit from: Rather than trying to outguess the market, passive investing assumes that over time, markets generally rise, and capturing the entire market's gains is better than trying to beat it. Best Fit: Passive Investing Passive investing offers compelling advantages for investors who are focused on building long-term wealth, such as retirement savers, college fund contributors, or those working toward financial independence. The U.S. stock market has historically trended upward. According to data from Morningstar and Vanguard, passive index funds tracking the S&P 500 have consistently outperformed the majority of active funds over 10-, 15-, and even 20-year periods. By minimizing management fees and trading costs, more of your money stays invested and working for you. Ideal for: tax-deferred and long-term taxable accounts, and those who prefer a set-it-and-forget-it strategy. Best Fit: Active Investing If you have a shorter time horizon or desire to leverage market fluctuations, active investing may better suit your goals. Active management allows you to take advantage of short-term price changes, economic shifts, or emerging sector trends. However, active investing requires more time, skill, and risk tolerance. A 2023 SPIVA (S&P Indices Versus Active) report revealed that more than 80% of U.S. large-cap actively managed funds underperformed the S&P 500 over the past decade. While some managers do beat the market, it's very difficult to do so consistently over the long haul. Ideal for: Experienced investors, high-net-worth individuals working with an advisor, or investors with a strong interest in market trends. Best Fit: Passive Investing Cost-conscious investors will appreciate the efficiency of passive investing. With expense ratios as low as 0.03%–0.06% (compared to 0.68% or more for active funds), the savings are substantial over time. Passive investing appeals to individuals who don't want to spend hours reviewing market data or making constant portfolio changes. Lower turnover also means fewer capital gains distributions, which can help reduce your tax burden. This is an important consideration for taxable investment accounts. Ideal for: Beginners, budget-focused investors, and those who prefer low-maintenance investment options. Best Fit: Active Investing If you want to outperform the broader market, active investing is the only route with the potential to deliver. While many investors are drawn to stories of high returns from stock picks or managed portfolios, the data shows that consistent outperformance is rare. Even when managers beat the market one year, they often underperform in the years that follow. Some investors pursue a 'core-satellite' strategy of using passive funds for the bulk of their portfolio and allocating a smaller portion to actively managed funds or individual stocks. This approach balances low-cost consistency with potential upside. Ideal for: Strategic investors willing to take calculated risks with a portion of their portfolio. Best Fit: Both (Depending on Strategy) If you're interested in socially responsible investing (SRI), environmental, social, and governance (ESG) factors, or sector-specific investments, both active and passive strategies offer solutions. Passive ESG index funds provide low-cost access to values-based investing, while active managers may go further by handpicking companies aligned with your beliefs. Active managers can also engage in shareholder advocacy or exclude certain industries entirely. Ideal for: Mission-driven investors, religious institutions, or those with specific social or environmental goals. Which Strategy Is Right for You? There's no one-size-fits-all answer. Your ideal investment approach depends on: Remember, your strategy can evolve. You might start with passive investing to build a foundation, and later explore active management for specific goals or opportunities.
