Might Modi Lose?
9 hours ago
Tuesday, April 30, 2013
Total Cost of Mutual Fund Ownership
Forbes Article
Mutual Funds have continued to enter the debate in terms of the value they contribute to a portfolio.
When you look at averages, mutual funds underperform. The main reason? They are closet indexers.
I am highly skeptical of adding mutual funds to a client portfolio. They have to prove to me they are different and provide value add. What do I look for?
1. How correlated are they with stocks and with bond indexes? How correlated are they with other bond products in the portfolio? I use assetcorrelation.com for this. I won't consider a fund that has a correlation > 0.70.
2. How are their expenses?
3. How do they reduce client risk? I posted a while ago that mutual funds can reduce risk, despite underperformance.
4. How stable is the fund and the manager? How likely is it they will be around 10 years from now?
5. Can they expose my client to investments that they would otherwise not have exposure to.
6. What is the tax implications? This is getting more attention all the time.
Mutual Funds have continued to enter the debate in terms of the value they contribute to a portfolio.
When you look at averages, mutual funds underperform. The main reason? They are closet indexers.
I am highly skeptical of adding mutual funds to a client portfolio. They have to prove to me they are different and provide value add. What do I look for?
1. How correlated are they with stocks and with bond indexes? How correlated are they with other bond products in the portfolio? I use assetcorrelation.com for this. I won't consider a fund that has a correlation > 0.70.
2. How are their expenses?
3. How do they reduce client risk? I posted a while ago that mutual funds can reduce risk, despite underperformance.
4. How stable is the fund and the manager? How likely is it they will be around 10 years from now?
5. Can they expose my client to investments that they would otherwise not have exposure to.
6. What is the tax implications? This is getting more attention all the time.
Monday, April 29, 2013
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