Funds Stage a Comeback: Time to Forgive and Forget?

To add (re: managed funds that purport to beat the market)

Another way to look at actively funds versus index funds goes something like this...

Penny smart. Dollar stupid.

You need to make more the offset the management fees, so you're working harder, not smarter.

I don't work for them, but bookmark this site if you value your money...

http://www.vanguard.com

Mr. Bogle also has an intriguing book out about how to rescue American capitalism, in which he discusses the move that has been made away from direct ownership to management by intermediaries (in terms of who manages the wealth). It's worth a read.

Angie Koutrotsios of IL @ Sep 04, 2009 02:06:35 AM

index funds

Yes, its probably true that 20% of managed funds beat the index funds every year, but the ones that do vary from year to year. Trying to predict which ones do it this year is a sucker bet.

John Newton of NY @ Aug 02, 2009 00:15:11 AM

Don't listen to people arguing against Index Funds

Having read this fabulous book titled "Learned Optimism" by famed guru of the new field of Positive Psychology, Martin Seligman, I put a positive cognitive spin on the current state of the economy and determined that since I am a member of Generation X, time is on my side, even if we're just coming out of this recession. This is the time, if you've not already done so, to promptly go out and open a Roth IRA and to accept the fact that although the market will recover sloooooooooowly, there is still time to make money from the stock market if you are still relatively young. Just get in now, while stocks are good buys, and in time, especially if you put in a little more on a regular basis (dollar cost averaging), you'll get more bang for your buck when the market is way up again.

But arguing against index funds is most likely being done by those who work at actively managing funds and making their commish money from trying to convince the rest of us that they are going to "beat the market!" long term. Um, no. I don't think so.

Over the long term, actively managed funds cost more money! They charge fees to manage all that activity. Get into a Vanguard index fund instead. NO LOAD.

And read something by Mr. Bogle. who will tell you just why you should not put so much faith into trying to "beat the market!" long term.

It's a pipe dream.

Vanguard Index. Roth IRA. It's slow and steady wealth-building instead of trying to get rich quick by being impatient and shelling out fees for actively managed funds.

Have any of them really beat that market over decades, once you factor in the higher expense associated with running them? Come on, now.

Angie Koutrotsios of IL @ Jul 30, 2009 19:49:07 PM

indexing is for put your money in and I don't want to put more time into investing.

I look at this way. If your willing to put a little time in researching funds. I think using common sense and going by the facts...... indexing you will never beat the market. 20 percent of fund managers beat the index funds on a historical bases, so why not be in the best 20 percent of funds? if you can beat the indexes plus cover the exspense ratio of the fund your ahead of the game. Sometimes if you take a snap shot of a period time funds are going to under perform the index and vise versa. You can't worry about short term fluctuation when investing. What matters is the results you are getting long term?

dan of MI @ Jul 19, 2009 10:54:37 AM

you're doing your readers a diservice!

I'm unsure of ms. marquardt's background in personal investment counseling, but she sure is doing no real service to your readers by interviewing the principal of the mutual fund store for recommendations and advice. that's akin to talking with a doctor for advice on a conservative drug regimen for heart disease when he makes his money implanting stents. nothing like providing useless information here. - Why in the world would anyone who has any real desire to hold on to what they have, invest in the likes of these very average, two star funds with expense ratios well above the 1% average with a 10 K minimum to get into the fund. Thanks but no thanks. You get the picture. As the previous glmory of ca stated, stick with the indexes. This is irresponsible reporting.

jonathan of PA @ Jul 12, 2009 21:12:04 PM