Here are three of the week’s top financial news, gathered from the web:
Don’t overlook traditional mutual funds
Some of the top performing mutual funds of the year are still losing clients at an all time high, Michael McDonald and Annie Massa said at Bloomberg. “Will Danoff’s $ 134 billion Fidelity Contrafund returned 32% last year, nearly 15 percentage points better than the S&P 500.” But investors withdrew $ 23.4 billion net from the fund this year. In contrast, over $ 200 billion has been poured into exchange-traded funds which are now “on track to permanently supplant human decision-makers.” Active managers with stellar records find it difficult to attract new funds over cheaper alternatives. Fidelity charges 85 cents for every $ 100 invested in Contrafund, while a passive investment in an ETF that tracks the S&P 500 “can cost as little as 3 cents for $ 100.”
Buy a car without the hassle of the dealership
“It took a pandemic to bring the car buying process into the 21st century,” Joann Muller told Axios. For years, car buying had remained stubbornly low-tech, thanks to car dealerships protected by state franchise laws and worried about missing out on opportunities to sell customers. But after the COVID-19 outbreak, “dealers had no choice but to adopt” a new model. Many have added software that allows customers to “browse inventory, apply for credit, and choose a payment schedule.” Others even offer “virtual test drives” to show in-vehicle technology and “contactless” vehicle deliveries to home buyers. Surprisingly, the dealerships have been “more profitable than ever”. Online shoppers “know exactly what they want” and the typical three hour visit to the showroom has been reduced to “a 15 minute online purchase”.
The ongoing Bitcoin frenzy
Bitcoin continued its record high rise in the first week of the new year, Arjun Kharpal and Ryan Browne told CNBC. The digital coin reached $ 40,000 last week to “lift the entire cryptocurrency market above $ 1 trillion for the first time” as more investors fear it will miss ” opportunities to make quick and easy profits from the bull run “. Bitcoin’s value has jumped 40% in the past 12 months. Investors have made Bitcoin a “safe haven asset” and a hedge against inflation concerns “as governments around the world embark on large-scale fiscal stimulus programs.” A recent research note from JPMorgan stated that “Bitcoin could reach $ 146,000 in the long run as it competes with gold as an ‘alternative’ currency.”
This article was first published in the latest issue of The week magazine. If you want to know more, you can try six risk-free issues of the magazine here.