Forty years ago on Wednesday, the index mutual fund was born when Vanguard Group's First Index Investment Trust (now known as the Vanguard 500 Index Fund) opened for business with $11.3 million in assets, writes WSJ Intelligent Investor columnist Jason Zweig.
Now, the Vanguard 500 Index Fund holds more than $252 billion, and index mutual funds and exchange-traded funds invest nearly $5 trillion in combined assets.
Although critics still abound, Mr. Zweig writes, we should all celebrate an innovation that has cut the cost of investing by more than 90% and radically democratized the financial markets.
Below, some of the best analysis and insight from WSJ writers and columnists, and beyond, on investing, the wealth-management business and more.
TALKING POINTS
Market driver. The S&P 500 reached highs in August with only one of its 10 sectors hitting a record: consumer discretionary. It is rare to have market highs without at least a couple of sectors hitting peaks, and investors often worry that when just a small group of companies is leading the S&P higher, the market may be frothy.
However, the lack of other sector records in August may be explained by another phenomenon driving the U.S. market: the rotation back into out-of-favor stocks that tend to do well when the economy is stronger, writes WSJ Streetwise columnist James Mackintosh.
Europe's outflows. Money has flowed out of European equity funds every week for more than six months, a stretch that is now longer than the previous record set during the financial crisis, according to WSJ. Few see the negative flows abating anytime soon, with earnings down, banks struggling across the Continent and the political landscape in flux.
Wednesday's markets. Stocks slipped Wednesday, closing out what traders have described as an eerily calm August with slight monthly losses, writes WSJ. One cause of the stock-market paralysis: questions about the course of U.S. monetary policy. Low interest rates have become the main driver of investments globally, pushing money into any corner of the markets that offer steady income payments.
The Dow Jones Industrial Average slipped 53 points, or 0.3%, to 18401. The Nasdaq Composite fell 0.2% but still logged a monthly gain of 1%. U.S. crude dropped 3.6% to $44.70 a barrel Wednesday, sparking a 1.4% drop in energy shares in the S&P 500 index. The S&P 500 declined 0.2%.
PLANNING & INVESTING
Shareholders get a voice in bankruptcies. Stock investors are lately demanding—and winning—the chance to fight for a recovery in bankruptcy, reports WSJ.
In chapter 11 bankruptcy reorganizations, shareholders don't get paid unless companies pay off all their debts, which typically means they don't get paid. Rather than accept defeat, however, shareholders in energy, coal and other commodities-focused companies are fighting for a voice, and possibly a recovery, in some of the biggest bankruptcies that have been filed over the past couple of years.
A 'How-to' for foreign home buyers. Nonresident foreign nationals face a tough time if they want to buy a U.S. home, but WSJ lays out some options they can try.
For starters, foreign buyers aren't eligible for government-backed conventional loans or most jumbo mortgages. While most lenders see the prospect of chasing a delinquent borrower overseas as too risky, some, such as Milford, Conn.-based Total Mortgage Services, offer nonconforming loans to affluent foreign borrowers and then sell them to an emerging market of nontraditional lenders, says Total Mortgage Chief Executive John Walsh.
However, these loans require a larger down payment than most mortgages, WSJ adds.
WSJ Watching Your Wealth podcast. Celebrity money manager Todd Morgan, CEO of Bel Air Investment Advisors, sits down with WSJ's Veronica Dagher to explain what the rich are buying with all the proceeds from their stock sales.
THE BUSINESS
Wells Fargo wins arbitration. Wells Fargo & Co.'s brokerage arm won a $931,000 Finra arbitration award from an adviser it fired three years earlier, reports OnWallStreet. Broker Robert Edward Loftus was ordered to pay Wells Fargo Advisers the sum for allegedly failing to repay three promissory notes, as well as cover the firm's legal fees.
Mr. Loftus, who argued he was wrongfully terminated, didn't respond to the publication's call seeking comment.
JUST BECAUSE
911 for cars. Car accidents are stressful enough, but a new device that plugs into a car automatically alerts emergency services in the event of an accident, writes WSJ. The device, known as Automatic Pro, and costs $130, also reports its location if the car it is plugged into is stolen, and it can monitor a teen's driving performance.
WSJ writer Geoffrey Fowler says "it's some of the best money you can spend on your car—and your peace of mind."
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