Heike Moeller January 28, 2020 Mutual Fund
In recent commentary, insiders have adopted the following opinions on mutual funds. "Most investors in mutual funds have no idea what they are invested in, which is the way the industry wants it." In addition, mutual funds are troubled because the rewarded for the amount of money they Attract, not the amount of money they earn.
Unfortunately, history seems to suggest not. Despite the fact that tens of thousands of individuals make their professions trying to beat the markets, almost none of them do so on a consistent basis. Many will have good runs, but ultimately no one seems to have a proven formula for beating the markets. Usually the hero of a bull market turns into the villain once the market turns on him or her.
Funds are usually chosen by those that want to cut down on the risk. The diversity of mutual funds allows for investing in more than one source. A mix of bonds, money market securities or stocks make up a fund in order to cut the risk of putting everything in one place. They are rated in order to help the investor chose which funds are right for them. Each company has its own standards for determining a funds rating.
Actively Managed Funds: All mutual funds that are actively managed by a fund company in an effort to add value to shareholders returns fall into this category. In theory, an experienced portfolio manager can surpass the returns of an index fund by making well-timed and disciplined trades. The unfortunate reality is that the vast majority of fund managers do NOT beat their index. But the good news is that the top 20% of these funds can and do on a regular basis. We will try to focus on this group of quality managers.
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