In a recent report by Goldman Sachs, Lipper, and FactSet, it shows that only 23% of active fund managers of large-cap core funds are outperforming the S&P 500 in 2014 YTD. What’s equally interesting is that out of the past 11 years, only twice have active fund managers outperformed the S&P 500.
Can you imagine investing in a mutual fund that not only underperforms the S&P 500, but also charges 1% in management fees a year? The active fund manager will likely never respond to you over e-mail. S/he will likely never pick up the phone to answer your questions either. All they will do is happily collect their fee no matter how poorly they perform. Just say “no” to a branded portfolio.
If you want help managing your assets, consider hiring a Registered Investment Advisor like Personal Capital who will create a custom diversified portfolio for you based on your individual financial situation and retirement goals. Our most important service is acting as a financial shepherd throughout your entire life. In addition to maintaining an efficient investment portfolio, we’re here to help with saving strategies, education planning, tax minimization, estate planning, and more. When times turn bad, we’ll be there to help guide you through the fire. Oh, and we’ll return your calls and respond to your e-mails as well.
It’s human nature to believe we are all better than average and can identify the few funds which will outperform. But most of us won’t. The sooner we can align perception with reality, the better off we will all be. Investing with actively managed mutual funds is a losing proposition.
Photo credit: The Market by Iman Mosaad, Flickr Creative Commons
The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.