TIPs/HIPs vs Index Funds - II

Do a filter on "index". If you go back 90 days you'll get a list of some 2 dozens threads on this topic.

er, please no HTML in the first line

To Tomc -

To answer just one of your questions, TIPS and HIPS do generate dividends. You might also be interested in knowing that membership in the Canadian Shareowners Association allows you to participate in a dividend reinvestment plan (DRIP) for these products.

Toronto Star has an article entitled "The Case Favoring (sic, sigh) Index Funds." It refers to a study by three academic economists into mutual fund-buying behaviour.

The question is, why do managed funds grow and prosper in spite of the mountains of evidence that a simple low-cost index fund is the better option for investors?

The professors came up with the following conclusions:

1. Investors fail to evaluate their fund's performance against a relative benchmark like the TSE or S&P500. Instead they compare them with their savings account return.

2. Insecurity encourages investors to believe that paying for active fund management must offer some benefit.

3. Other investors believe they are smarter than the market and will eventually come out ahead. They seek control and ego-fulfilment. Well we know that conclusion certainly doesn't apply around here. :-) I am master of my own destiny and people who are poor have no one but themselves to blame. They should have bought Pfister.

4. Investors mistakenly believe that mf advertising connotes a fund company's financial strength and excellence.

5. The media create the illusion that factors impacting the market could have been known in advance by experts, whose positive results on any given day reflects superior knowledge.

6. The media deify active fund traders despite evidence that their chances of beating the market over time are worse than - dare I say it? - flipping a coin. The media perpetuates the idea that luck is skill. In other words, index funds aren't sexy enough to sell.

7. Investors are unaware of the costs associated with active fund management and the damage those costs impose on compounded returns over the years. Thanks to gumby's pictures that tell thousands of words, we all know better. Right??

8. Investors enjoy the thrill of taking risks and recounting their savvy skills (I'm guilty on that score - ask me how well my Aic Adv has done since I bought it back in late '95)

Thanks for all the info. My filter was set at 30 days so I did not see the old discussions. Sorry to have asked a repetitive question

jd: What was the date of that article on Index Funds? Globefund gives the U.S.Index Fund a 5 year rating of A+. Index funds always place in at least the 2nd quartile which is more than can be said about many fund managers.

jog,

It was the Jan28 (wed) Toronto Star, Business section, p. D4. I think this is the year I will get into TIPS-35.

me too
... bid $35.95 yesterday
... didn't get any
... aah, but next week

Does anyone know whether it is possible to reinvest the dividends distributed from TIPS just like reinvesting distributions from a mutual fund?

If so, do i just inform my broker?

See my earlier posting on this thread. It's the only way I know of.

Gumby,

Sigh, TIPS bid $36.95 yesterday. Bring back yer crystal ball.