Myth of Mutual Funds

[dawgball]

It gets worse. Of all 203 mutual funds with at least $100 million under management from 1984 to 1998, only 8 managed to beat the Vanguard 500. Your odds, then, of picking a "winning" mutual fund during that time were less than 4%. By way of comparison, if you get dealt two face cards in blackjack, and your inner idiot shouts, "Hit me!", you have about an 8% chance of winning.

http://www.fastcompany.com/magazine/128/made-to-stick-the-myth-of-mutual-funds.html

Great stuff!

 

[IntenseOperator]

Thanks DB!

 

[djv]

Never new this thks. Have heard stories about times like this but much shorter time periods. Thats why I still believe in stocks as better long run plays. And believe you should follow and move in and out of mutual funds the same way. And never pay big expensense for Funds. That does not make them any better then chep ones. In fact that vanguard 500 is ran for .10 or .20.

 

[selkirk]

the story is much the same in cdn. there was a study that showed only 8% of all managed mutual funds beat the index....

there was a recent one, that many mutual fund supporters point to, not sure why...many people cliam in a bear market active manager really outshine the index.

between aug 2000 and dec 2002 39% active managed funds beat the TSX capped index.

so a majority of them did not, and also active managed funds beat them because they had a certain degree of cash. still they later lagged the index during the recovery.

there are some good mutual funds but you are probably best to start with a index fund/etf that has a low cost, and tracks the market.

then you can compare other investments to your index product.

also though there are some good funds most people do no reaserch on them.

I have had people who call me who ask me what fund should they invest in with this bank, mutual fund company...I ask when are they going, oh about twenty minutes....or some have called from the office, of the sales rep....incredible....

mutual funds are for the most part sold not bought.

most people could not tell you three facts about the fund they just invested in....

expenses/fees
style
manager
past history
how it did against the index.
during down and up markets
does it have an overweight ie. resources, tech, ect.

ect...

thanks
selkirk