This is a nice summary of the flaws in many mutual funds. Too many mutual funds are simply index funds disguised as something else. And most of the rest are simply attempts to market a product that isn’t designed to actually add value (but sounds fancy enough to accumulate assets). If you missed John Bogle’s discussion on the flaws in the mutual fund industry you should watch it here.
The 10 things via MarketWatch:
1. “Cheap funds often outperform pricey ones.”
2. “We can’t beat the market.”
3. “When skill fails, we just double (or quintuple) our odds.”
4. “People aren’t buying our product…”
5. “…except when we pay them kickbacks.”
6. “Hedge funds are our idols.”
7. “Our boards are rubber stamps.”
8. “Blame us for runaway CEO pay.”
9. “We played a starring role in the financial crisis.”
10. “Our lobby crushed bipartisan efforts at reform.”
Read the full piece here.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.