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Mutual Fund Short Comings - 7 Reasons To Invest Elsewhere

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The Mutual Fund industry has been a marketing juggernaut since the mid-1980's. Billions of dollars have been deposited into mutual funds, but that decision by many investors may have cost them more than they realized. There are many reasons why mutual funds are not everything they market themselves to be. Underperformance. From 1992 through 2002, growth-orientated mutual funds averaged 8.5% returns compared to an average annual return of 9.68% for the S&P 500 Index. Certainly, in any given year, some mutual funds outperform the market; however, the vast majority do not. Further, the average mutual fund investor will frequently sell an underperforming fund in an attempt to find that elusive 'best performing' fund which only incurs redemption fees, sales charges, and taxes which, in turn, drags their returns even lower. Transparency. Currently, mutual funds only report their holdings on annual, semi-annual, or quarterly basis. By the time, the fund owner is in p...
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Exchange Traded Funds or Mutual Funds?

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In the last 10 years a new class of fund has come up: Exchange Traded Funds (ETFs). These new funds are completely transforming the fund industry, putting a lot of pressure on mutual funds. So if you save money and plan to retire some day, you should know about this. How does Exchange Traded Funds (ETFs) work? Instead of having accounts that customers credit by wiring their money in an account with a fund institute, Exchange Traded Funds (ETFs) list shares in the market that investors simply buy online. When investors buy ETFs shares online, the ETF fund company receives the money and invests it. Moreover in traditional mutual funds, a fund manager takes many investment decision in a very secretive manner, but Exchange Traded Funds (ETFs) usually have predefine strategies to automate the investment process much more than traditional mutual funds where most steps in the investment process are still manual. Well you might ask: what's the point? The point is that ETFs manage...
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index funds vs. mutual funds

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There was a time when financial advisors all agreed on one thing: index funds vs. mutual funds . These days, however, you don't hear much about those anymore but you do hear a lot about exchange-traded funds or ETFs. While mutual funds continue to be popular, they cannot match the growth in popularity of ETFs. What's the difference between the two and why pick one over the other? ETFs are like mutual funds in that they pool investment resources and usually spread them out over a variety of investments. ETFs, however, are designed to be traded like stocks. ETFs can be traded anytime the market is open and their prices will change during that time. Collective investment schemes are priced only at the end of the day and that is the only time they can be bought and sold. ETFs may be sold short and bought on margin; mutual funds cannot. ETFs have no management fees and usually have lower expenses too. There are many types of ETFs that track many different markets. There ar...
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