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Thursday, April 14, 2011

Are Mutual Funds a Scam?

Mark Hebner, CEO of Index Fund Advisors (IFA), gives his no-punches-pulled views on actively managed mutual funds to Henry Blodgett of Yahoo! Finance. He is of course "talking his book" since he heads up a $1.5 billion index fund management company. My perspective is this:  the evidence overwhelmingly shows that, after fees, it is very likely that you will under perform the market with an active fund over the long run. So, why risk your retirement assets in this endeavor?  Instead, if you buy into the long-term viability of the U.S. and global economy, then take advantage of the low-cost ways to participate.

The IFA website is worth a visit. Contains many useful resources.
Source:  Yahoo! Finance
Disclosure:  Information is presented for educational purposes and not intended as a recommendation.


  1. The other day I was talking to an acquaintance about how I'd be satisfied ifI could get about 8% annualized from my portfolio - he looked at me as though I was nuts! He said I should invest in mutual funds because their returns are a lot higher (those deceptive ads work apparently!)

    I nodded and slowly walked away.

  2. @MoneyCone The ads do definitely work. I turn it around and ask people what their return has been. Most people don't know. It is interesting that mutual fund providers plaster all over the place the returns of the 5 best performers out of their 300 funds but can't put a client's returns on their statements.

  3. no scam. buy funds and sell funds is one of the biggest investment nowadays.