August 10, 2006
The Major Drawback of Not Paying some Mutual Fund Schmuck 150 BPs a Year
This bit from this article, International ETFs Surge in Popularity After Strong Returns, made me laugh out loud:
A major drawback of exchange-traded funds, however, is that they only offer index-based investment strategies. Because of the way ETFs are structured, the funds can’t hire a money manager to pick stocks. They are instead limited to replicating stock-market returns of the country or region they are designed around.
“A major drawback,” ha!
Cat: | Time: 9:11 am (utc+8)
August 10th, 2006 at 10:17 am
>>They are instead limited to replicating stock-market returns
Limited, indeed. How many people, if they actually had any idea of the after-expenses return of their fund with its “stock-picking expert” at the helm, would give their big toe to be “limited” to a market return…
August 10th, 2006 at 10:23 am
Will: Exactly, and if they understood their after-expense, after-tax return then they’d really start to resent the fund manager’s Mercedes and second home, lol. (Thank god most people don’t have a clue!)
August 10th, 2006 at 1:40 pm
since most money managers underperform the big indices, it would be smart for investors to put a majority of their funds in etfs and then try to enhance that performance by selecting a couple of stocks that will out perform the etfs.