If you are going to invest in actively managed mutual funds, then these funds need to have a sufficiently large asset base to fund the necessary securities research and analysis.

If an active fund is too small, then fund securities research, analysis, and management quality can suffer or fees could grow. Passively managed index funds and ETFs do not have the significant overhead that actively managed mutual funds have associated with personnel to evaluate investment alternatives.

Because of their much lower analytical costs, the minimum size of passively managed index funds and ETFs can be far less of an issue, when compared with an actively managed mutual fund. Nevertheless, both actively managed mutual funds and passively managed mutual funds have to cover their marketing, sales, legal, customer service, and other costs - many of which will benefit from the financial economies of scale related to the amount of assets under management.

To amortize the management expense ratio that is necessary to manage properly a mutual fund or ETF each year, a minimum total asset base is required.

To illustrate, an actively managed $100M stock mutual fund with a 1% management expense ratio yields $1 million annually for securities research, analytic expenses, and other fund management costs. In the grand scheme of what it takes to run actively managed mutual funds each year, $1M is just not a lot of money. Therefore, it would be reasonable for you to set your minimum asset selection criteria at several hundred million dollars or even higher for any diversified investment fund — particularly those that are actively managed mutual funds.

If the maximum management expense ratio you are willing to pay each year is lower than 1%, then the required asset base would need to be proportionately higher. If the expenses of a particular “style” of active fund, such as emerging markets stocks, tend to be significantly higher, then you would want an even larger asset base over which to spread securities research and other portfolio management costs.

While the investment research literature indicates that passive index mutual fund strategies lead to better net performance on average, The Pasadena Financial Planner does not expect that actively managed mutual funds will disappear. Therefore, if you still are going to invest in any investment fund and particularly actively managed funds, then you should want them to have a sufficiently large asset base to fund the necessary research and pay all other administrative costs. If a fund is too small, then fund management quality could suffer and/or fees will increase.

However with actively managed mutual funds, the problem is not that there is no “gross” value added. On average, fund management professionals make a modest positive contribution before their expenses. They may be doing so at the expense of amateurs who are poor portfolio self-managers.

One major problem with active professional mutual fund management is that, on average, they charge substantially more than they return in improved performance.

The average active mutual fund management team does not make a sufficiently great incremental performance contribution to overcome their more substantial added costs. Furthermore, there is no reliable way to tell future mutual fund management winners versus losers from among all active professional mutual fund managers. Therefore, in “net” rather than “gross” terms for individual investor portfolios, it is far more likely for active managers to trail rather than exceed a passive market index return.

There are significant differences in costs between actively managed mutual funds and passively managed index funds. By not attempting to beat the market, which most often will meet with failure, no load index funds can dramatically reduce costs and taxes and improve the odds of better net returns. While there are some areas of specialized expertise in index fund management, properly managing an index mutual fund depends largely on having a very efficient trading operation to track the index and an efficient customer service operation.

No load mutual funds and ETFs do not have the significant overhead that actively managed mutual funds do associated with securities research, and therefore, the need for expensive securities research analysts is greatly reduced.

Because of their much lower costs, the minimum size of a passively managed index fund is less of an issue than it is with actively managed mutual funds. Nevertheless, individual investors still need to be concerned about index funds that are too small.

With no load mutual funds, The Pasadena Financial Planner suggests that you screen for no load index funds using the maximum management expense ratio that you will personally willing to tolerate. If no load mutual funds are run efficiently, then their management expense ratios should be very, very low. While there are some ridiculous examples of domestic no load index funds with management expense ratios over 1% annually, even a .25% upper screening limit will give you a wide range of no load index funds from which to choose.

Finally, note also that newly created, actively managed and passively managed funds that are spawned within a larger fund family may benefit for a time from both the fund family’s economies of scale and its subsidies of the management expense ratio. Administrative economies of scale can permit new funds with smaller asset sizes to exist for a longer period.

Very often, fund families will substantially subsidize the management expense ratio of their newer funds. This temporarily reduction of the management expense ratio can have the effect of increasing short-term performance. However, if a new fund does not grow quickly, then it is likely to be shut down or merged into another inferior performing and/or more risky fund within that fund family. Therefore, you should choose mature noload mutual funds instead.

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No Load Mutual Funds

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• The Best No Load Mutual Funds Have VERY LOW Investment Management Expenses ( A high ETF or mutual fund management expense ratio can only be justified, if an investment fund earns even higher net returns that compensate for these higher expenses. Sadly, this is most often NOT the case with costly actively managed equity and bond mutual funds and with high cost exchange-traded funds (ETFs). In addition, you have [...])
• Choose Mature Noload Mutual Funds ( Investing in more mature stock and bond mutual funds and exchanged-traded funds (ETFs) allows you to evaluate the historical consistency of a fund's record. On average, the future portfolio returns of more mature funds are probably no more predictable than for very young funds with a similar style or strategy. However, the record of accomplishment of [...])
• Screen Out Inferior Mutual Fund Performance ( Screen Out Inferior Mutual Fund Performance -- BUT ONLY AFTER using other ETF and mutual fund selection criteria Superior or even average mutual fund performance in the past simply DOES NOT predict similar fund performance in the future. However, the investment research literature does provide some modest evidence that substantially inferior past mutual fund performance is more [...])
• Dan Wiener’s Vanguard Mutual Fund Investment Newsletter Promotion (<<<<<< Go to Part 1: Vanguard Index Mutual Funds Versus Vanguard Managed Funds In this second part of this two part article, we: discuss an email promoting a mutual fund newsletter that some of my clients forwarded to me, attempt to understand certain rather exceptional investment performance claims for this investment letter, try to reconcile these performance claims [...])
• The Best No Load Mutual Funds and ETFs ( How to Select the Top No Load Mutual Funds and ETFs Given the extremely large number and variety of stock - equity, bond - fixed income, and equity mutual funds and ETFs, investors need a rational basis to select among them. For example, there are over 60,000 different mutual fund investment share classes sold worldwide. Some [...])
• The Best Mutual Funds Have NO Sales Loads and NO 12b-1 Fees ( Sales loads and other 12b1 fees just pay financial advisors to recommend more expensive mutual funds and ETFs There is no good evidence that investment sales loads and other 12b-1 sales fees charged to investors result in higher mutual fund and ETF performance. In fact, the opposite has repeatedly been shown to be true. Mutual funds have [...])
• Vanguard Index Mutual Funds Versus Vanguard Managed Funds ( Go to Part 2: Vanguard Mutual Fund Investment Newsletter >>>>>>> This two-part article: 1) summarizes a recent research report that compared Vanguard's passively managed index mutual funds with Vanguard's actively managed mutual funds (The title of this study by Abel Rodriguez and Edward Tower is "Do Vanguard’s Managed Funds Beat Its Index Funds?" provide links to it [...])
• 7 Ways to Pick the Best Noload Mutual Funds and ETFs ( Scientific Criteria for Selecting Top No Load Mutual Funds and the Best Mutual Funds and ETFs People simply want to invest in what they hope will be the top no load mutual funds and the best noload mutual funds and exchange traded funds (ETFs). They want selection criteria that can lead to a higher probability of [...])
• About ( An Objective Website About the Best No Load Funds This website has been researched, written, and published independently. To ensure objectivity, no compensation of any kind has been paid by any third party to influence the editorial content of this website. All articles on this website were written by the Pasadena Financial Planner. Start a conversation [...])

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Investing in more mature stock and bond mutual funds and exchanged-traded funds (ETFs) allows you to evaluate the historical consistency of a fund’s record.

On average, the future portfolio returns of more mature funds are probably no more predictable than for very young funds with a similar style or strategy. However, the record of accomplishment of a more mature fund can provide more confidence in its commitment to its strategy and in its ability to remain in business. While there is no guarantee that an older fund will not fail, you have a better chance to avoid involuntary participation in the frenetic birth and death process of many infant stock and bond mutual funds.

Very young mutual funds simply lack records of accomplishment. Therefore, very young stock and bond mutual funds are more likely to put you into the position of being an experimental guinea pig of mutual fund companies and the ETF industry. Concerning screening criteria, simply set a minimum age for mutual funds and ETFs that you are willing to have in your investment portfolio. Three years should be adequate, and there is probably no reason to have a higher minimum. The point is simply to avoid allowing ETF and mutual fund companies to experiment with your money. Choose low cost noload mutual funds that have been around for at least three years.

The financial securities industry is clever and tries very hard to attract your investment mutual fund and ETF dollars.

For example, data from Lipper, Inc. indicated that 1,460 new mutual funds were started in 2003, 2,309 in 2002, and 2,392 in 2001.¹ The actual number of truly new and distinct funds is smaller, because Lipper counts different share classes as separate funds.

Differences between share classes have nothing to do with the management of a fund’s portfolio. Instead, these share class differences are due to the structure of the sales compensation paid to the investment counselor or financial advisor who convinces you to invest in stock and bond mutual funds. Different share classes simply assess higher or lower front-end and back-end sales load charges and higher or lower annual expense ratios.

Mutual fund companies and ETF companies might argue that they are trying to offer innovative new stock and bond mutual funds to meet evolving investor demands.

This answer is largely rubbish. Mutual fund companies and ETF companies are trying to get your assets into their funds. A true innovation motive is quite unlikely, because tens of thousands of funds of all types already exist worldwide. For example, there are almost as many different US domestic stock mutual funds, as there were U.S. publicly traded companies (This counts only U.S. firms that are traded on public exchanges and excludes over the counter (OTC) penny stocks.)

A more cynical view of this frenetic fund birthing process is that mutual fund companies and ETF companies recognize that fund performance is much more a matter of luck than skill. If fund families keep forming new funds, then some of these new funds will perform better by chance than the average fund within the particular investment style category.

The large number of new funds launched annually indicates that barriers to entry are very low. Fund families can launch a new fund and use their existing operations to support the new fund. If early fund returns happen to exceed its benchmark, then the fund family has a new fund to sell with a short but apparently superior performance record.

Small new mutual funds with stellar investment fund performance records attract investor assets

Sometimes, new fund managers will get lucky by taking positions in smaller firms with more volatile stock prices, or they may pick some larger capitalization firms whose stocks might appreciate dramatically in the short run. The very short, but apparently stellar, record of accomplishment of some new funds makes it much easier to attract investors. These funds can live to see other days, if new assets flow in fast enough.

You should pay close attention the expense ratios of a very young fund and the expense-related footnotes in its prospectus. It is common for fund families to subsidize the management expenses of new funds for a time. By keeping the management expense ratio down, the funds can temporarily inflate performance.

If the fund’s securities selection is lucky, then more investors may come running. If the asset base grows quickly enough then could enable the new fund to grow its management expenses without increasing its annual management expense ratio.

However, if a mutual fund is not so lucky, its standalone management expenses will not disappear. Fund families do not want to subsidize costs of their small, languishing funds for an extended period, and the pressure will be on for the fund to “stand on its own.” Therefore, you need to watch for upward creep in the management expense ratio of a very young fund over time. Note also that the higher a fund’s expenses, the more likely it is that the fund’s net returns will fall short, when compared to a passive market index benchmark.

The new mutual fund grindhouse: Toss ‘em out — Chew ‘em up

In the Warner Brothers movie 300, the Spartans tossed to their deaths those babies whom they deemed to be inferior. Mutual fund companies also are Spartan in this respect. Unfortunately, most mutual fund companies do not extend this Spartan mentality to the management expense ratios that they charge investors across all their funds.

A new mutual fund that does poorly will often be put out of its misery, although this mortality process will do nothing for the misery of the mutual fund’s investors. Most of these under performing fund dogs (or puppies) either will be shut down or will be merged into larger funds. For example, “according to data from Lipper Inc. 870 U.S. mutual funds were merged into other funds (in 2003), while 464 were liquidated. The pace is similar to 839 mergers and 555 liquidations in 2002, and 956 mergers and 433 liquidations in 2001.”²

As noted previously in this article, 1430 mutual funds were created in 2003. When 2003’s 870 mergers and 464 liquidations are combined with these new funds, then the net number of new mutual funds was just 96! Fund financial innovation certainly seems like an awfully harsh process, through which many investors find themselves being dragged. The cynic would say that the mutual fund industry’s rapid birth and infanticide cycle simply allows some of the fund industry’s inferior performance history to be swept under the carpet and obscured or erased.

Mutual fund companies tend to merge new, under performing mutual funds into their inferior mature mutual funds

Furthermore, to the chagrin of participating investors, when unsuccessful young mutual funds are merged, there also is evidence that the older mutual funds — into which these young, failed funds tend to be merged — will usually have inferior characteristics from the investor’s perspective. The larger and older existing funds into which new and unsuccessful funds are merged have a higher tendency to be both more risky and poorer performing than the average mutual fund.³

Apparently, many mutual fund companies do not want to lose the assets that they already have captured in their inferior new funds by liquidating them and issuing refunds. However, at the same time, they also appear not to want to merge these failed young funds with their more successful older funds and thereby drag down the performance history of these more successful older funds. Instead, they usually merge their sick puppies with their older dogs, which are large enough to stay alive within the cost structure of the mutual fund companies.

1) Hayashi, Yuka. “More Mutual Funds are Disappearing Despite Market Recovery.” Dow Jones Newswires. February 26, 2004.
2) ibid
3) Edwin J. Elton, Martin J. Gruber, and Christopher R. Blake. “Survivorship Bias and Mutual Fund Performance.” Review of Financial Studies, Winter 1996, Vol. 9, No. 4: pp 1097-1120

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No Load Mutual Funds

• The Best Noload Mutual Funds Have VERY LOW Portfolio Turnover ( Higher mutual fund turnover means higher securities trading costs, which reduce investment fund performance. Short-term mutual fund trading is a zero sum game played against other very well informed mutual fund traders and other securities market traders. On average, higher mutual fund turnover is far more likely to result in lower investment fund performance -- instead [...])
• The Best Mutual Funds Have NO Sales Loads and NO 12b-1 Fees ( Sales loads and other 12b1 fees just pay financial advisors to recommend more expensive mutual funds and ETFs There is no good evidence that investment sales loads and other 12b-1 sales fees charged to investors result in higher mutual fund and ETF performance. In fact, the opposite has repeatedly been shown to be true. Mutual funds have [...])
• Screen Out Inferior Mutual Fund Performance ( Screen Out Inferior Mutual Fund Performance -- BUT ONLY AFTER using other ETF and mutual fund selection criteria Superior or even average mutual fund performance in the past simply DOES NOT predict similar fund performance in the future. However, the investment research literature does provide some modest evidence that substantially inferior past mutual fund performance is more [...])
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• Vanguard Index Mutual Funds Versus Vanguard Managed Funds ( Go to Part 2: Vanguard Mutual Fund Investment Newsletter >>>>>>> This two-part article: 1) summarizes a recent research report that compared Vanguard's passively managed index mutual funds with Vanguard's actively managed mutual funds (The title of this study by Abel Rodriguez and Edward Tower is "Do Vanguard’s Managed Funds Beat Its Index Funds?" provide links to it [...])
• About ( An Objective Website About the Best No Load Funds This website has been researched, written, and published independently. To ensure objectivity, no compensation of any kind has been paid by any third party to influence the editorial content of this website. All articles on this website were written by the Pasadena Financial Planner. Start a conversation [...])
• Dan Wiener’s Vanguard Mutual Fund Investment Newsletter Promotion (<<<<<< Go to Part 1: Vanguard Index Mutual Funds Versus Vanguard Managed Funds In this second part of this two part article, we: discuss an email promoting a mutual fund newsletter that some of my clients forwarded to me, attempt to understand certain rather exceptional investment performance claims for this investment letter, try to reconcile these performance claims [...])
• The Best No Load Mutual Funds Have VERY LOW Investment Management Expenses ( A high ETF or mutual fund management expense ratio can only be justified, if an investment fund earns even higher net returns that compensate for these higher expenses. Sadly, this is most often NOT the case with costly actively managed equity and bond mutual funds and with high cost exchange-traded funds (ETFs). In addition, you have [...])
• 7 Ways to Pick the Best Noload Mutual Funds and ETFs ( Scientific Criteria for Selecting Top No Load Mutual Funds and the Best Mutual Funds and ETFs People simply want to invest in what they hope will be the top no load mutual funds and the best noload mutual funds and exchange traded funds (ETFs). They want selection criteria that can lead to a higher probability of [...])
• The Best No Load Mutual Funds and ETFs ( How to Select the Top No Load Mutual Funds and ETFs Given the extremely large number and variety of stock - equity, bond - fixed income, and equity mutual funds and ETFs, investors need a rational basis to select among them. For example, there are over 60,000 different mutual fund investment share classes sold worldwide. Some [...])

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A high ETF or mutual fund management expense ratio can only be justified, if an investment fund earns even higher net returns that compensate for these higher expenses.

Sadly, this is most often NOT the case with costly actively managed equity and bond mutual funds and with high cost exchange-traded funds (ETFs). In addition, you have no reliable way to tell beforehand which actively managed fund will return more than its added costs. With a passively managed index fund, you are highly likely to get an investment return that is close to the securities market return less your costs.

A higher management expense ratio will tend to cause an actively managed fund to trail the return of index funds. Therefore, your chances of picking a supposedly superior actively managed fund are greatly reduced. Even in the short run, only a minority of actively managed mutual funds perform well enough to compensate for their higher investment management expenses.

In the longer term, even fewer actively managed stock and bond funds will beat the market, because “superior” short-term performance is mostly due to luck rather than to skill. Luck tends not to last. When the performance evaluation time period gets longer, then there are fewer and fewer actively managed mutual funds with net performance that is better than a passively managed index fund targeting a market return. Actively managed mutual funds are simply not reliable vehicles to plan for your family’s long term financial needs!

The average actively managed mutual fund manager demonstrates some skill, but the added costs swamp this additional investment return.

Certain scientific studies have demonstrated that some professionally managed equity mutual funds seem to exhibit a modest level of apparent skill in their ability either to choose stocks and bonds and/or to manage their stock and bond portfolios. These mutual fund managers may be slightly better stock pickers, and/or they may have better portfolio management practices.

In managing their portfolios, these mutual fund managers may not make the behavioral mistakes that many individual investors do. Examples of behavioral investment mistakes are holding on to losers too long and selling winners too quickly.

Scientific finance studies have demonstrated a very slight persistence in stock price trends for some, but not all equities. This persistence could benefit portfolio managers who hold their winners longer and sell their losers more quickly. Evidence of superior skill for bond fund manager seems entirely lacking, so buying no load bond funds is very clearly a better strategy.

Most professional investment fund managers have expertise, but efficient market competition tends to make them all mediocre in the long term.

Just because scientific finance studies do not support buying actively managed stock and bond funds on a net returns basis, this does not mean that professional money managers are not skillful. To the contrary, the level of professional expertise in portfolio management at most fund companies is very high. However, unlike American schools and colleges, the real-time securities markets have built-in grade and achievement deflators.

On average, the markets deliver C level returns before costs. If your costs are lower, you are more likely to get an A or B. If your costs are higher, you are more likely to get a D or F. The major factor that adds to all the confusion is that market participants must put a current, risk-adjusted value on the future economic prospects of their potential investment holdings.

These highly uncertain predictions make securities market prices highly volatile. After the fact, market participants will eventually be graded on the future value impacts of currently unknowable future events. Some investment fund managers will be lucky, while others will not be in the short run. In the long run, their investment fund manager performance usually averages out.

Minor, short-term skill demonstrated by some active professional investment fund managers, perpetuates the completely spurious active management versus passive management “debate.”

From the perspective of the individual investor, this tired active management versus passive management “debate” or argument is simply and completely irrelevant. Scientific finance studies have the advantage of being done after the fact, and they use large sets of historical investment fund performance data to see what actually did happen. Some studies provide continuing fuel for self-interested industry promoters to keep saying that actively managed mutual funds provide value.

However, without a crystal ball, individual investors instead face the daunting task of trying to pick some of the few future winners out of a very large crowd of investment fund managers who will not provide a positive net return. The active management debate implies that after all the additional management expense ratio costs, mutual fund trading costs, higher capital gains taxes, and extra time are taken into account, investors are supposed to have some crystal ball to sort future winners from losers.

Nobody has such a crystal ball. The closest approximation to a crystal ball that is available is the simple rule to only buy very low cost mutual funds and ETFs. All very low cost mutual funds and ETFs are passive investment funds.

The investment fund management industry keeps pointing to past performance and Morningstar ratings as predictors, when superior past performance and 4-star and 5-star ratings are completely useless predictors. Instead lower costs and lower turnover are far superior predictors of future mutual fund performance.

Even the scientific studies that demonstrate some professional skill, do not show that this incremental skill justifies paying the much higher fees of active funds. On average, actively managed funds simply do not have sufficiently higher returns to cover even their higher direct management expense ratios.

The research shows that added management expense ratio costs typically outweight added performance by about 2 to 1 or 3 to 1. And, this does not even count the higher trading costs and the deadweight loss that individual investors are subjected to when they pay investment sales loads and 12b1 fees!

How is that for an “active” mutual fund or ETF investment return?

Spend 2 or 3 or 4 dollars more to get a dollar back! Waste your valuable time trying to figure out which funds will demonstrate better performance. Take the risk that you could pay far more and still end up picking one of the worst rather than one of the “best” actively managed funds, after the results are in. Do this over and over across your lifetime. Sounds fun, huh?

Did you know that one investment research study on growth mutual funds demonstrated that there was a 12 to 1 ratio between the cumulative returns of the best performing growth mutual fund to the worst performing growth mutual fund over the 19 year period from 1976 to 1994?? (See: Edward S. O’Neal, “How Many Mutual Funds Constitute a Diversified Mutual Fund Portfolio?” Financial Analysts Journal, March/April 1997: 37-46)

Sound ridiculous to you? For the slimmer chance of winning the investment manager selection lottery, do you want to roll the dice and end up with a terrible fund or a series of terrible funds instead? Perhaps this is not the best way to plan your family’s financial future.

Why bother listening to this completely self-serving securities industry “debate,” when you can simply buy very low cost, broad market index mutual funds and ETF, and then get on with your life? Do you really want the pleasure of spending a lot of time in your life listening to one financial advisor after another tell you that a succession of expensive investment funds are “better”? Then, do you want the excitement of watching these “better” funds perform over time, when they are far more likely not to be better as time passes and as your portfolio is harmed?

Furthermore, higher active transactions costs are most often hidden and left out of the comparison, even though higher active fund trading costs can will drag down net returns for higher turnover funds. Also, these studies usually do not account for increased taxes paid by individual investors caused by active trading. Finally, they do not measure the opportunity cost related to an individual investor’s extra time spent on futile, ongoing efforts to pick “superior” funds that most often will not be.

An individual investor is far better served by choosing from among the numerous passive, noload mutual funds and exchange-traded funds that have decided to compete on low costs.

Obviously, a decision rule that focuses on lower fees will strongly favor passively managed index funds over actively managed funds. You will have more choices than you need, if your restrict your investment fund choices to those passively managed mutual funds and ETFs that are trying to attract individual investors’ money by charging very low fees.

When screening mutual funds and ETFs, you should first set a relatively stringent upper limit on the annual expense ratio that you are willing to pay. With passively managed domestic index funds, .5% annually is an overly generous upper limit. Many domestic index funds are available with management fees under .25%. Because of their variety, it is not as easy to generalize about screening international and global index funds. However, much lower management expense ratios should still be the key screening rule for these non-US funds.

With actively managed mutual funds, you first really should ask yourself whether you have a valid reason for still preferring them over passively managed index funds. If you still have a good reason to select an actively managed fund, which most individual investors will not have, then you should still seek lower management expense ratios among active funds. You might start screening with an upper expense ratio limit of .75% and then move lower. Obviously, you should also amortize any sales loads that you cannot avoid. Again, however, there is never a good reason to pay a front end sales load or back end sales load. There are many better noload mutual funds available for you to buy directly from no load mutual fund companies.

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No Load Mutual Funds

• About ( An Objective Website About the Best No Load Funds This website has been researched, written, and published independently. To ensure objectivity, no compensation of any kind has been paid by any third party to influence the editorial content of this website. All articles on this website were written by the Pasadena Financial Planner. Start a conversation [...])
• Avoid Very Small Mutual Funds and ETFs ( If you are going to invest in actively managed mutual funds, then these funds need to have a sufficiently large asset base to fund the necessary securities research and analysis. If an active fund is too small, then fund securities research, analysis, and management quality can suffer or fees could grow. Passively managed index funds and [...])
• Dan Wiener’s Vanguard Mutual Fund Investment Newsletter Promotion (<<<<<< Go to Part 1: Vanguard Index Mutual Funds Versus Vanguard Managed Funds In this second part of this two part article, we: discuss an email promoting a mutual fund newsletter that some of my clients forwarded to me, attempt to understand certain rather exceptional investment performance claims for this investment letter, try to reconcile these performance claims [...])
• Sitemap ()
• The Best Mutual Funds Have NO Sales Loads and NO 12b-1 Fees ( Sales loads and other 12b1 fees just pay financial advisors to recommend more expensive mutual funds and ETFs There is no good evidence that investment sales loads and other 12b-1 sales fees charged to investors result in higher mutual fund and ETF performance. In fact, the opposite has repeatedly been shown to be true. Mutual funds have [...])
• Vanguard Index Mutual Funds Versus Vanguard Managed Funds ( Go to Part 2: Vanguard Mutual Fund Investment Newsletter >>>>>>> This two-part article: 1) summarizes a recent research report that compared Vanguard's passively managed index mutual funds with Vanguard's actively managed mutual funds (The title of this study by Abel Rodriguez and Edward Tower is "Do Vanguard’s Managed Funds Beat Its Index Funds?" provide links to it [...])
• Choose Mature Noload Mutual Funds ( Investing in more mature stock and bond mutual funds and exchanged-traded funds (ETFs) allows you to evaluate the historical consistency of a fund's record. On average, the future portfolio returns of more mature funds are probably no more predictable than for very young funds with a similar style or strategy. However, the record of accomplishment of [...])
• The Best No Load Mutual Funds and ETFs ( How to Select the Top No Load Mutual Funds and ETFs Given the extremely large number and variety of stock - equity, bond - fixed income, and equity mutual funds and ETFs, investors need a rational basis to select among them. For example, there are over 60,000 different mutual fund investment share classes sold worldwide. Some [...])
• Screen Out Inferior Mutual Fund Performance ( Screen Out Inferior Mutual Fund Performance -- BUT ONLY AFTER using other ETF and mutual fund selection criteria Superior or even average mutual fund performance in the past simply DOES NOT predict similar fund performance in the future. However, the investment research literature does provide some modest evidence that substantially inferior past mutual fund performance is more [...])
• Avoid Large Actively Managed Mutual Funds ( Big mutual fund portfolio positions and higher percentage ownership of any company’s stocks and bonds are not good for actively managed mutual fund performance. These big positions and high percentages are not good for your personal investment portfolio either. Large size constrains how a fund can trade and how efficiently it can do so. When an [...])

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