Q. I have a question about winter driving. Front wheel drive is good in the winter and better with snow tires. What about snow tires on all four wheels versus four all season tires? I guess my real question is, are four snow tires worth the money?

A. Winter tires improve the traction of any vehicle in cold, wintry conditions. In addition to a tread design that is better suited to dig through the snow, the rubber is made of a compound that stays stickier in cold weather and provides better traction even on dry roads. I was once road testing an Audi A6 quattro, and it had summer tires on it. The temperature was cold and there was about one inch of snow on the road. I drove less than a mile slipping and sliding, turned around, and used my own car with winter tires. If you need to be out before the snowplows, buying winter tires is a good investment.

John Paul is AAA Northeasts Car Doctor. He has over 40 years of experience in the automotive business and is an ASE certified master technician. E-mail your car question to jpaul@aaanortheast.com.

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Are winter tires a good investment? - Boston.com

SAO PAULO, Nov 14 (Reuters) - Carrefour Brasil plans to invest around 2 billion reais ($475 million) in 2020 to push forward its digital transformation and expand brick-and-mortar stores, particularly wholesale and convenience formats, executives said on Thursday.

The local subsidiary of Frances Carrefour SA is likely to maintain this level of capital expenditure until 2024, they said. In 2019, its investments will be around 1.8 billion reais, depending on areas the group may acquire later this year.

Chief Executive Noel Prioux said the group expects economic conditions in Brazil to only improve later in 2020. It will be a recovering year for a stronger economy in 2021, he said.

Carrefour Brasil will keep the expansion pace of its wholesale unit Atacadao at 20 new stores per year but aims to accelerate the openings of convenience stores.

The companys efforts also include offering a wider range of financial products, such as online accounts and loans, to strengthen the already sharp growth of its e-commerce platform.

Carrefour Brasil recently acquired a 49% stake in fintech EWally to introduce a digital bank account to its customers as early as next year, according to Chief Financial Officer, Sbastien Durchon.

$1 = 4.1950 reaisReporting by Gabriela Mello; Editing by Steve Orlofsky

Read the rest here:
Carrefour Brasil to invest around 2 billion reais per year through 2024 - Reuters

Let's face it, the time is long past due for Bumble founder Whitney Wolfe Herd to occupy the role of CEO in her own company. Now, with the Blackstone Group taking a majority share in the dating app, she will finally get her due. The new investment values the app at $3 billion. As part of the deal, Andrey Andreev, the current CEO and founder of Bumble's parent company MagicLab will sell his stake in Bumble and exit his role as CEO. Wolfe Herd retains her stake.

Whitney Wolfe Herdfounded Bumble, the dating app that requires that women make the first move, in December 2014. Prior to that, she was a co-founder at Tinder, where she reportedly came up with the company's name and served as the VP of Marketing. After Wolfe Herd departed Tinder, she didn't have any plans to go back into the world of dating apps. She actually wanted to found a social space for women online. She pitched the idea to Russian billionaire Badoo Andrey Andreev. He didn't love the concept, but he did love Whitney's passion. He advised her to stick to what she knew: dating apps.

Bennett Raglin/Getty Images

From that meeting, Wolfe Herd landed on the idea for Bumble. It is pretty simple: when two people match, women have 24 hours to send the first message. If they don't, the match disappears. If they send a message, the man has 24 hours to reply, or the match disappears. Once both parties have sent a message, that timer gets turned off. Andreev put up $10 million for 70% of the company. He also gave Wolfe Herd access to his dating app Badoo's systems and software. Wolfe Herd brought the marketing prowess to the deal.

Together, Andreev and Wolfe Herd's stakes amount to about 80% of the company. Blackstone's multi-billion investment in Bumble strengthens the firm's strategy to take controlling stakes in companies with strong cash flows. Blackstone plans to help Bumble expand into more markets and working towards Wolfe Herd's original vision of facilitating non-dating related social meetups. Bumble already does this. In 2016, Bumble launched BFF, an app that helps women find friends. In 2017, it launched Bizz, an app that focuses on women meeting people for career networking. At each turn, Bumble puts women first and puts women in control.

Bumble now has more than 75 million users, up from 35 million users a little more than a year ago. Andreev's MagicLab is thought to be exploring an IPO.

Continue reading here:
Bumble Founder Whitney Wolfe Herd Finally Elevated To CEO With New Investment From Blackstone Group - Celebrity Net Worth

Communities that intentionally invest in entrepreneurs and young businesses are the ones that will grow and thrive in the 21st century, according to Ross DeVol, president and CEO of Heartland Forward, a nonprofit think tank focused on improving economic performance in the center of the U.S.

Delivering the keynote address at this mornings annual CPEX Smart Growth Summit, DeVol presented new data and statistics to support what may seem like common sense: Innovation and entrepreneurship are critical components of places and can create jobs and vitality in sustaining growth over the long term.

Its not small firms that create growth, DeVol said. Its young firms that scale up. Its important to innovate and create new firms because eventually your anchor firms are not going to be as dominant.

DeVol presented maps showing metropolitan areas, and smaller micropolitan areas, where entrepreneurial activity and investment is high. Unsurprisingly, those communities tend to be wealthier, better educated and located in California, the Pacific Northwest, Texas, Massachusetts and south Florida.

Much of the heartland, including Louisiana, lags far behind. One Louisiana city, however, ranks among Heartland Forwards 30 most dynamic metropolitans: Lake Charles, coming in at No. 13 in the U.S.

While DeVol acknowledged that much of Lake Charles growth is fueled by the booming petrochemical sector, he said: Clearly, Lake Charles is trying to diversify its economy.

New Orleans-Metairie came in at No. 262 on the list, while Baton Rouge ranked 264th.

We must do more to participate in the knowledge-based economy and invest more in human capital, said DeVol, noting that smaller and heartland communities have an opportunity to market themselves to companies looking for places to locate that have a lower cost, a higher quality of life, less expensive housing options.

Its important for communities in the heartland to take advantage of existing resources like community colleges, which he says are underutilized and underappreciated, and also to do more to encourage financiers to support new and emerging businesses.

Financiers must become more comfortable investing in early-stage companies that dont have a lot of capital, he said.

Planning is a key component in this dynamic becomes it gives communities a road map to move forward.

Creating your own firms determines your destiny, he said. You need a shared vision, a plan people buy into. Without a plan, you dont know where youre headed. Planning is absolutely critical.

The CPEX summit continues through today. See the days lineup here.

Continue reading here:
Intentional investment is the key for communities to thrive - Greater Baton Rouge Business Report

Warren Buffett is considered one of the greatest investors of our time. From his first investment at age 11 to his peak net worth of over $80 billion, its easy to see why. Many people all around the globe have aspired to replicate his incredible success, from the investment world over to the stock market. In good news, it is possible to apply seven of his key investment principles to your real estate investment strategy.

Find quality companies.

Buffett invests in high-quality companies with strong fundamentals, quicker to pay a fair price for a great company than a low price for a mediocre company.

When investing in real estate, invest in quality properties. It seems an obvious observation, but its one truly worth understanding. What exactly is a quality property? How do you decide a high-quality property versus a low-quality one? In much the same way as Buffett observes companies, Im talking about properties that have great bones and strong fundamental attributes such as a desirable location and financials that will make it appealing as a rental property or as a flip. Quality should be top priority within an investment strategy.

Look at your stocks as a business.

In a 2014CNBC interview, Buffett explained, If you own your stocks as an investment... look at them as a business.

When I coach new real estate investors, one of the first things I aim for is to get them thinking like an entrepreneur. Even if they are buying their very first property, having that business mindset is key in achieving success. In my experience, investors who mind the numbers and treat their investment as a business venture do much better than those who only follow their gut. Dont let this scare you, however; you dont need to be a mathematics genius to become a data-driven investor.

Invest in what you know.

Buffett is famously credited with saying, Never investin a businessyou do notunderstand.

The good news is that analyzing a property is much simpler than analyzing and understanding an entire business. However, spending the time to really get to know the type of properties you are investing in, as well as their market, is extremely important for investment success.

Think about your risk of loss.

Always evaluate the worst-case scenario before investing. This is a great tool to use to get you into the correct mindset, especially if youre just beginning your investment journey.

When it comes to real estate, understanding your worst-case scenario helps identify your own tolerance to taking risks and supports you in calculating how much reserves you should keep.

Have discipline.

One of Buffetts most important guideposts has been following his investment strategy, not his emotions.

I know many people who always seem to buy when the market is very hot, and panic and sell when its not. By having discipline, sticking to a well-planned strategy and not deviating from specific investment criteria, you will avoid making this common mistake.

Identify undervalued stocks.

Buffett is a value investor. That means investing in companies that seem to be trading under the value of the company.

This is an occurrence that frequently happens in real estate as well. The asking price of any property is set by a real estate agent who glanced at a few comparable properties and decided where to set the price with their client. Keep this in mind as identifying underpriced properties is essential to maximizing your success. Ultimately, when investing in real estate, you make money when you buy.

Be aggressive during tough times.

Buffett achievedgreat successwhen he saw an opportunity to invest when the market was not favorable.

Real estate investing is also cyclical. Im sure youve heard the terms buyers market and sellers market. A buyers market means that the buyer is advantaged; theres a lot of supply, and buyers have more negotiating power. As the name suggests, when its a buyers market, its time to buy! Real estate investment is very much a long game, so keep a long-term mindset.

When investing in real estate, it really boils down to a few simple questions:

Have you done your research?

Is the property undervalued?

Is it making money? Have you considered the revenue and the expenses?

Can things be done to increase its value (and cash flow, if its a rental property)?

Will market conditions help increase the value?

Is it in a desirable location? Have you considered the quality of the school and the job market, plans for future development, crime, etc.?

Are there major expenses or other risks you need to consider?

After analyzing everything, is there another property that has more potential?

By keeping Warren Buffetts investment principles in mind when investing in real estate, you will be set to start building your own empire and find opportunities in every market condition.

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Invest In Real Estate Like Warren Buffett Invests In The Stock Market - Forbes

If your financial advisor made you buy any of these "Mutual Fund Misfires of the Market" with high expenses and low returns, you need to reassess your advisor.

The easiest way to judge a mutual fund's quality over time is by analyzing its performance and fees. Our Zacks Rank of over 19,000 mutual funds has identified some of the worst of the worst mutual funds you should avoid, the funds with the highest fees and poorest long-term performance.

First, let's break down some of the funds currently part of our "Mutual Fund Misfires of the Market." If you happen to have put your money into any of these misfires, we'll help assess some of our best Zacks Ranked mutual funds.

3 Mutual Fund Misfires

Now, let's take a look at three market misfires.

Iron Strategic Income Fund Investor (IRNIX): 1.45% expense ratio and 0.65% management fee. IRNIX is an Allocation Balanced mutual fund. Allocation Balanced funds look to invest across asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. With a five year after-expenses return of 0.97%, you're mostly paying more in fees than returns.

Mainstay ICAP International Investor (ICELX): 1.41% expense ratio, 0.8%. ICELX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. This fund has yearly returns of -0.07% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

Thornburg Limited Term Municipal CA A (LTCAX) - 0.94% expense ratio, 0.49% management fee. This fund has yielded yearly returns of 0.88% in the course of the last five years. Too bad!

3 Top Ranked Mutual Funds

Since you've seen the most noticeably lowest Zacks Ranked mutual funds, how about we take a look at some of the top ranked mutual funds with the least fees.

Harbor Large Cap Value Institutional (HAVLX) is a fund that has an expense ratio of 0.68%, and a management fee of 0.6%. HAVLX is a part of the Large Cap Value category, and invests in equities with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. With yearly returns of 11.17% over the last five years, this fund clearly wins.

Calvert Equity Portfolio A (CSIEX) is a stand out fund. CSIEX is a Large Cap Growth mutual fund, and these funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers. With five-year annualized performance of 12.93% and expense ratio of 1%, this diversified fund is an attractive buy with a strong history of performance.

Janus Henderson Growth & Income D (JNGIX) has an expense ratio of 0.77% and management fee of 0.6%. JNGIX is a Large Cap Blend fund, targeting companies with market caps of over $10 billion. These funds offer investors a stability, and are perfect for people with a "buy and hold" mindset. With annual returns of 11.56% over the last five years, this fund is a well-diversified fund with a long track record of success.

Bottom Line

These examples underscore the huge range in quality of mutual funds - from the really bad to the astonishingly good. There is no reason for your advisor to keep your money in any fund that charges more than you get in return (unless they're getting something out of it, like a high commission).

Do You Know the Top 9 Retirement Investing Mistakes?

Whether you're planning to retire early or not, don't let investing mistakes derail your plans.

If you have $500,000 or more to invest and want to learn more, click the link to download our free report, 9 Retirement Mistakes that will Ruin Your Retirement.

Get Your Free (CSIEX): Fund Analysis Report

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To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Are You Invested In These 3 Mutual Fund Misfires? - November 14, 2019 - Nasdaq

Over the past five years, 642 public safety pension funds in the suburbs and downstate have received more than $3.2 billion in investment returns.

However, those funds were expected to generate at least $4.1 billion from investments, a nearly $1 billion miss.

In all, 85% of the fire and police pension funds didn't meet the state's minimum investment funding target between 2014 and 2018. That's according to a Daily Herald analysis of pension fund financial reports published every two years by the Illinois Department of Insurance.

The shortfalls could be even greater, because local pension boards sometimes set investment goals higher than the state's targets.

The state's actuary assigns an assumed rate of return to every fund each year based largely on the amount to be invested and the type of investments available to funds of that size. In 2018, those rates ranged from 4.25% to 6.5%.

Overall, the funds beat the targets in 2014 and 2017 but fell short in 2015, 2016 and -- by $729 million -- 2018. Each fund covers a single local police or fire department.

One reason the funds miss investment goals is that many don't have enough money to participate in investments that might bring greater rewards, with greater risk.

"Even the largest of these police and fire pension funds are small, and the small ones are tiny, and they don't have the heft to make good investments over a period of time," said Louis Kosiba, a task force member and former executive director of the Illinois Municipal Retirement Fund.

The investment shortfalls only compound chronic underfunding in the pension programs for police and firefighters.

"It's very concerning, because it's definitely going in the wrong direction, and this reinforces our thinking that consolidation is a good thing," said Christine Radogno, a former Republican state senator and member of the Illinois Pension Consolidation Feasibility Task Force.

"The employer contribution is dictated by many assumptions, and when those assumptions are wrong, it's the employer that has to cover the miss," Radogno said. When the employer is a local government, that cost is passed to taxpayers.

The task force recently issued its findings and recommended pooling the assets of the more than 350 suburban and downstate police pension funds into a single fund and doing the same for the nearly 300 fire pension funds. Chicago's police and fire pension programs would remain separate.

Some pension fund experts aren't sold on the task force's rosy outlook on consolidation. Many municipalities are pushing for consolidation, but the Illinois Public Pension Fund Association is lobbying against it.

Amanda Kass, associate director of the Government Finance Research Center at the University of Illinois-Chicago, argues that if the investments tank, more municipalities will be hurt under consolidation than when the funds were on their own.

"Assets pooled can take on riskier investments, but that risk can introduce greater volatility, and that impacts municipal pension contributions," she said.

Kass said the biggest problem with consolidation is it doesn't address unfunded liabilities -- the gap between a pension fund's assets and the benefits promised to workers. On average, the police and fire pensions are 55% funded, studies show. There's also the matter of the 3% annually compounded cost-of-living increase each pension gets that helps balloon taxpayer costs but that's constitutionally protected.

Many suburbs argue consolidation at least could prevent that gap from getting worse.

Naperville fire and police pension funds are among the state's largest public safety pension funds and so have more liberal investment capabilities, yet each fell more than $15 million short of the state's investment revenue expectations over the course of the past five years.

"It is cause for concern and why we've advocated for consolidation and for a change in the investment capabilities," said Rachel Mayer, the city's finance director and treasurer of both funds. "We're only getting a 4.8% rate of return, and if we were able to take on more risk, we think we'd average 7%."

Fire and police pensions in both Aurora and Hoffman Estates also missed investment fund targets by more than $10 million over the past five years. The Des Plaines police pension fund and Lisle-Woodridge fire pension fund each were off by more than $10 million as well, according to the analysis.

The task force estimates consolidation of assets would generate an additional $820 million to $2.5 billion in the first five years, which proponents said would reduce property tax burdens on homeowners. The bill authorizing consolidation has been filed in the state Senate.

On Friday, the Fraternal Order of Police gave the consolidation its blessing based on promised amendments to the proposal that would give firefighters and police a majority of seats on the investment boards.

Proponents argue consolidation will reduce administrative costs, though the recommendation does not include eliminating the local pension boards that handle disability claims.

Deputy Gov. Dan Hynes, another member of the task force, said the fire and police boards lobbied for two separate statewide funds instead of consolidation into a single public safety pension fund.

"There's just a desire on the police and fire organizations to keep those funds separate and have some autonomy," Hynes said.

Contact Jake at jgriffin@dailyherald.com or (847) 427-4602.

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Public safety pension investment returns are missing targets -- by nearly $1 billion - Chicago Daily Herald

For those looking for the antithesis of tweet-driven investing, Bank of America Merrill Lynch strategists are offering an answer.

The equity thematic investing team developed a blueprint for what long-term investors can own to take advantage of 10 so-called megatrends, such as peak globalization and demographic trends like peak youth.

In a note to clients this week, the strategists predicted a new paradigm in the coming decade that will disrupt the status quo. Part of that disruption comes from record-low interest rates, making monetary policy less effective. The changing backdrop could also lead to new economic theories, the death of globalization, and an accelerated geopolitical race for technological supremacy. Unprecedented strides in innovation will come as global data knowledge and interaction with connected devices soarin turn challenging governments and creating privacy issues even as it creates economic value.

Here is a snapshot of the 10 megatrends the strategists see over the next decade and how to play them:

Markets have been moving on the latest developmentsor setbacksfor a possible trade deal between the U.S. and China, with the hope that the two countries can form some sort of pact.

But BofAMLs team predicts the unrestricted free movement of goods, capital, and labor will no longer be a guarantee over the next decade. Already, global trade growth this year is up just 2.5%, below global gross domestic product growtha rare event outside of a recession. Bilateral trade battles are replacing multilateral structures. These shifts suggest that economic volatility from trade tensions could become more of the norm.

What to own, according to BofAML: real assets like commodities, farmland, precious metals, and real estate over financial assets, which benefited from three decades of globalization. They also suggest owning aerospace, defense, energy, and wateralong with infrastructureas national security and economic sovereignty dominate policy.

In terms of stocks, the strategists say look to small-cap stocks and cyclical value sectorsrather than tech and health care.

Todays bond market and more than $13 trillion in debt yielding negative rates pose the biggest vulnerability to markets in the 2020s, according to the strategists.

Monetary policy largess of the 2010s induced significant upside in asset prices, but the economic spoils went to holders of capital not workers, the strategists say. The policy response to next recession will seek to correct the excesses of the 2010s that led to widespread wealth inequality and financial engineering. That will likely mean higher interest rates, lower earnings, or both.

What to own: Gold and gold miners, monopolies like utilities that have pricing power, and the 30-year U.S. Treasury. T-bills, real assets, and high-quality bank stocks could also offer a hedge against the bond bubble popping. Meanwhile high-quality companies with pricing powerthat are out of political crosshairscould weather an equity deleveraging. Think defense, waste management, industrial gas, data processing and payments, and global beverages.

The possibility that central bankers are unable to reflate the economy as monetary policy loses its effectiveness is a mounting concern for investors.

What to own: Gold and real assets if the leadership of the U.S. dollar cracks. As the heap of negative-yielding debt grows, the more likely bond proxies in the equity worldhigh-yielding stocks like utilities or dividend payersshould see another move up, according to the strategists.

The middle class continues to swell in emerging markets. Citing research by the Brookings Institution, BofAML says roughly every second five people enter the middle class.

What to own: new middle-class households mean more shoppers for refrigerators, washing machines, and motorcycles, but also for services such as tourism, education, health and entertainment.

The aging boom: The number of grandparents are set to outnumber the worlds children in the 2020s. Overall, the aging population means more saving over spending, which is deflationary instead of inflationary, the strategists write.

Move over millennials, here come Gen Z. They care about: Sustainability, tech-savvy, focused on experiences and the sharing economy, not conspicuous consumption.

Likely losers: bricks-and-mortar retailers.

BofAML sees a nearing inflection point in the fight against climate change and expects the 2020s to be the decade of clean energy solutions and bold actions in a make earth green again strategy.

What to own: clean energy, electric vehicles. Losers: fossil fuels, diesel cars, single-use plastics.

Robots may not replace humans soon but half of jobs are at risk of automation by 2035. As more activities can be automated, processes can become much more efficient, but the shift could change global supply chains from when cheap emerging market labor was the big driver of globalization, the strategists write.

What to own: Investments that play into automation, local production, big data, and artificial intelligence, while those tied to global supply chains are among the losers.

BofAML strategists are in the camp that the trade war is going to transition into a tech war in the 2020s as the U.S. and China fight for leadership in technologies ranging from quantum computing, big data, 5G, artificial intelligence, electric vehicles, robotics, and cybersecurity.

The strategists expect global defense, tech, and cybersecurity companies to benefit over the next decade in this race. While the U.S. technology sector could be hampered by regulation and hardening sentiment, Chinese companies are pouring more resources into becoming less reliant on the U.S. and other foreign technology suppliers.

What to own: BofAML says look to emerging-market assets, while developed markets could lose out as China becomes more self-reliant.

Asset managers are rushing to get onto the environmental, social, and governance, or ESG, investing bandwagon. BofAML expects $20 trillion of assets in ESG strategies over the next 20 yearsnearly the market value of the S&P 500.

The strategists see strong demand for thematically-driven investing, especially among GenX and GenY, which total 4.4 billion people and represent about $21 trillion of income globally. By 2020, millennials will account for 16% of global private wealth and 87% of millennials believe ESG factors and impact investing are important in their investment process, according to last years BofA U.S. Trust survey.

What to own: ESG strategies, while business-as-usual investing and companies focused solely on maximizing profits could lose out.

The Jetsons come to life. By 2030, BofAML says there will be 500 billion connectable devices, killing privacy. What to own: Shares of companies involved in the Internet of Things, connectivity and smart cities, as well as big brother surveillance technology.

Tourism and nanosatellites are the next frontier for an industry that could be worth about $1 trillion by 2030, according to the strategists.

Winners: aerospace and defense companies. Losers: legacy satellites.

Write to Reshma Kapadia at reshma.kapadia@barrons.com

The rest is here:
10 Ways to Invest for the Next Decade, According to BofAML - Barron's

An increasingly popular movement across the investing world is to shun active investing in favor of passive investing. It is the practice of putting your fund into a broadly diversified ETF that tracks a particular market index.

It is called passive investing as opposed to active investing because there is no decision making or trading being done to reconfigure the portfolio other than to continue mirroring its target index as accurately as possible.

The reason that an increasing number of investors choose this approach is because:

Because of the combination of these three qualities, ETFs are widely perceived as generating comparable, if not superior, risk-adjusted returns relative to active investing strategies despite requiring much less time, effort, and expertise.

I am myself a big proponent of passive investing for most market sectors, including large cap stocks. However, when it comes to REITs, I believe that this movement is grossly mistaken. This is one of the only sectors where I believe that active investors are well-rewarded in the long run.

Below we explain why we favor active strategies vs. passive strategies for REIT investments.

Almost all REIT ETFs are market cap-weighted, meaning that they create an inordinate amount of blind demand for large-cap REITs. In other words, large REIT ETFs such as VNQ, which has over $60 billion in assets under management, buy enormous positions in large-cap REITs regardless of how well the current price correlates to underlying performance. This has the obvious effect of creating a price premium in large cap REITs relative to small-cap REITs.

Today, this has reached a rather extreme point, with small-cap REITs valued at a ~40% discount to larger peers without regard to actual underlying fundamentals.

As a result of this clear disconnect within the sector, long-term active investors are given a great opportunity to outperform their passive peers given the principle that, in the long run, the market is a weighing machine (according to Benjamin Graham, anyway).

ETFs are almost always cheaper than investing in mutual fund counterparts. There are several REIT ETFs that have very low annual expense ratios (0.5% or lower).

However, owning individual publicly-traded REITs is even cheaper than investing in REIT ETFs. After the initial purchase is made, individual REITs will always have an expense ratio of 0.00%. There is no cost to hold a REIT, regardless of the holding period.

Even small fees add up in the long run and can lead to large disparities in total performance.

You cannot hand-select which REITs you own with a REIT ETF. REIT ETFs give you no control over your portfolio. You cannot buy or sell individual REITs, which means you cannot sift the wheat from the chaff in your portfolio. By purchasing REIT index ETFs, you are forced to own the junk along with the jewels in the sector:

I could go on and on. The point is that there are a lot of REITs that are not worth owning. Some are overleveraged. Others own highly risky properties. And some are so conflicted that you wouldnt want to entrust your capital with them.

With ETFs, you have no option. You will own all REITs including those that are poised for more disappointing results in the long run.

Because REIT ETFs (VNQ; IYR) invest heavily in overpriced large cap REITs, they will typically pay out a very small 3 to 4% dividend yield. For a real estate investment, this is not acceptable for us.

Real estate is supposed to provide high and consistent income within a portfolio. ETFs fail to achieve this goal by investing its capital in richly-valued low-yielding REITs.

Even putting total returns aside, many investors would rather target a higher - yet sustainable - dividend yield for meeting passive income needs.

Before we move on to present our market-beating approach, we want to make it clear that it's not suitable for everyone. We have access to superior resources, do this full time and have access to management teams because we represent more than 1000 REIT investors at High Yield Landlord.

Now that this disclosure is out of the way, this is what we do to target better investment results:

Back in May 2017, Spirit Realty Capital (SRC) traded at an estimated ~30% discount to NAV and a nearly 10% dividend yield. In hindsight, this was a fantastic opportunity for active REIT investors:

It's not a widely followed large cap. It owns alpha-rich specialty assets. It traded at a hefty discount to NAV despite strong qualities.

Since presenting our thesis on Seeking Alpha, SRC has returned 77% in just two years - close to 4x more than the VNQ ETF.

It is by targeting this type of situations that we aim to outperform the VNQ ETF. SRC was our largest position then and remains a sizable holding to this day.

Our Core Portfolio currently has a 7.75% dividend yield with a comparable 69% payout ratio despite a yield that's almost double the index. Beyond the dividends, the core holdings are trading substantially below intrinsic value at just 9.5x FFO - providing both margin of safety and capital appreciation potential (REITs trade on average at over 18x FFO).

In this sense, our alpha is expected to come from many different angles (higher yield, deeper value, better sectorial composition, strong managements, etc).

Note that other active REIT investors have been implementing similar strategies for decades with great success. The annual outperformance after fees has been 100-200 basis points per year on average, with the best investors reaching up to 22% per year compared to "just" ~10% for indexes:

source

But most importantly to us, we generate high income while we wait. It gives us the feeling of being a "Landlord" collecting rent checks, rather than a stock market trader who speculates on appreciation. ETFs and their low yields do not satisfy the needs of retirees and other income-driven investors.

High Yield Landlord recently broke the 1000-member mark! Our prices will increase soon but all members who sign up now are grandfathered for life at today's discounted rate!

If you are still sitting on the sidelines now is your time to act. Start your 2-week free trial TODAY and lock-in this discounted rate before we hike it!

We have over 100 five-star reviews from members who are already profiting from our 8% yielding portfolio.

Disclosure: I am/we are long SRC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Why I Won't Invest In REIT ETFs - Seeking Alpha

From a fundraising perspective, Los Angeles has become just the southern-most part of the Bay Area. Top-tier VCs from SF visit LA regularly, and entrepreneurs raise from investors upstate and downstate in one process. Anecdotally, as an LA resident of 4 years, theres been a palpable uptick of entrepreneurs from the Bay Area who move down here after exiting to found their next company.

Los Angeles is a hub for a wide range of startups, but it has two major groupings: consumer-facing startups that tap into Hollywoods marketing culture, and the deep-tech ecosystem created by the citys role as a hub for aerospace, defense and R&D.

To track how the ecosystem for software and digital media startups here is evolving, I asked a few of the top consumer VCs based there to share some of the trends they are most excited about investing in right now:

The key takeaway is perhaps the diversity of their responses: investors here are going deep into trends across the spectrum of consumer spending. Consumer health and transportation are mentioned, as they were in my surveys of VCs in London and in New York, but this group repeatedly predicts a new wave of interactive, social media startups (albeit with different perspectives on what it looks like).

Kevin Zhang, partner at Upfront Ventures

Im a strong believer its the best time to be a game developer now. Every 10 years or so distribution shakes up, now giants like MSFT, Google, Sony, Epic, etc. are rushing in to shift gamers to subscriptions and cloud gaming, which means big exclusive content library building with lots of non-dilutive capital for developers. Games themselves are becoming bigger, cross-platform, cheaper to build and more accessible than ever thanks to advancement in game engine and networking tech. Related: theres a new generation of mobile entertainment brewing at the intersection of short-form video, live, audience participation and social play; its marrying whats worked with UGC and live video with in-app-purchases and retention tactics of casual games to create more accessible and bite-sized entertainment destinations.

Mike Palank, partner at MaC Venture Capital

While it used to be that great content alone made for a compelling entertainment experience, as we move into the future it will be the blending of great content and amazing tech that will truly capture and retain peoples attention. Weve seen those funny Youtube videos of babies swiping pictures in physical magazines showcasing their expectations that everything is interactive. I think in much the same way, expectations around filmed media (movies + TV) will trend towards the interactive. We are seeing some truly interesting experimentation around interactive right now from companies like Netflix, Unrd, Eko, CtrlMovie, Playdeo, Hovercast, Aether, Within, Twitch and others.

The winners of the streaming wars understand this and I believe will supplement their content slates with interesting technology to make the viewing experience unique and participatory (Quibi has already announced some examples of this). At MaC, we are looking for those innovative companies that are re-thinking how consumers experience filmed entertainment to make it more experiential, interactive and engaging.

Effie Epstein, partner at Sound Ventures

At Sound, we believe that investors have an enormous responsibility to help shape the future we all want to see. To that end, weve been seeing a lot of promising innovation emerge around financial inclusion and digital healthcare. For example, Divvy Homes is a company that is making home ownership a possibility for the millions of Americans who struggle to afford a down payment, and Affirm is giving consumers a fair alternative to credit cards in an age where Americans are more in debt than ever. Meanwhile, TruePill is making it easier and more affordable for end consumers to access medication by changing the way medicine gets delivered, and Alma is making mental healthcare easier for consumers as well as for practitioners.

Read more from the original source:
Where LA's top consumer VCs are looking to invest - TechCrunch