Managed mutual funds are usually outperformed by index funds, year after year. And in instances where a fund manager may do better than an unmanaged indexed fund or exchange traded fund (ETF), he or she often will not repeat that success in following years.
Furthermore, managed funds have higher expense costs. Indexed, unmanaged mutual funds therefore have a decided advantage.
A research study done by Morningstar, Inc. pointed up another positive factor. When risk taken by an average fund manager to attempt to outperform an index is considered, that manager’s efforts were found to have accomplished even less for the investor.
So paying for mutual fund management does not pay off. ( See the Earl J Weinreb NewsHole® comments.)
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