Felix Salmon

Beware those S&P 500 benchmarks

Next time a fund manager brags of outperforming the S&P 500, remember this:

A favorite index for advisers has been the S&P 500, because its performance has been below every other major asset class over the past decade. Virtually any portfolio diversification away from large-cap U.S. stocks would have outperformed the predominantly large-cap S&P 500. All an investor needed was a small allocation to international stocks, small-cap stocks, REITs or bonds–or even cash–and his portfolio would have “beaten the market.”

The vulture fund debate

Greg Palast is back bashing vulture funds again: his Newsnight piece (web story here) is airing tonight, in slightly different form, on BBC World News America. The last time he mined this particular vein, I responded with a 5,500-word blog entry in defense of vulture funds, and I’m determined not to disappear down that particular rabbit hole this time, especially since all concerned — including Palast — seem to be much more constructive this time around.