Investors are continuing to buy managed mutual funds though most fund managers rarely consistently beat the securities averages. That is why more and more are turning to the use of indexed mutual funds and related Exchange Traded Funds( ETFs).
Also, index mutual funds and ETFs are generally much lower-cost than managed funds. Low cost is a most important investment factor you can rely upon for long-term results.
Another good reason: When some managers actually do better than indexes in a particular type of fund, they sometimes get nervous. Then, they play it safe and merely attempt to emulate the averages the rest of the year. They may be afraid to defy the odds of being successful, compared to indexes.
I have always suggested that index funds be bought instead of managed funds. Especially when, with large mutual fund portfolios, managers tend to find it very difficult to outperform indexes.
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