With stock funds, ‘passive’ keeps beating ‘active.’

A client of ours shared an article with us from the October 6th, 2013 issue of the Los Angeles Times titled, With stock funds, ‘passive’ keeps beating ‘active.’ But many investors still gamble.  

I guess he remembered me making this same statement, as I am sure most of my clients have also heard.  Although it is not always true, with regard to most domestic small cap, mid cap and large cap funds ‘passive’ beats ‘active”.  The article points out many reasons for this but singles out internal expenses, that is the fees that the mutual fund companies take for their services, as a significant factor for the disparity.

As your Wealth Manager, seeking out the funds with the lowest expenses, all things considered, is one of the important functions we perform.  It’s also one of the benefits of working with a Fee Only Investment Adviser.  Since we receive nothing from the mutual fund companies, we have no conflict of interest and are free to choose those funds that keep their expenses low and track closely their broad indexes or said another way, ‘passively managed funds.”

To view the Los Angeles Times article please CLICK HERE.

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