Compared to index funds, actively managed mutual funds still stink

It always baffles me when my highly paid engineering coworkers refuse to manage their own investment portfolios and insist that a professional needs to do it. All you have to do is buy a Vanguard index fund ETF at Interactive Brokers or something similar. They have such agency and competence in everything else, but think finances are unknowable. Even just a 0.5% fee adds up to a huge percentage of your net worth gone after a few decades.

It is hard to not notice that most of the actively managed funds that consistently do well are almost if not entirely their own customers exclusively. Management fees and performance hit differently in these cases.<p>It should be a lesson about incentives as much performance.

If you let someone invest money for you they should have a fiduciary duty to you. Otherwise they are just trying to take your money via fees.

Fidelity’s been nagging me to come in and talk with them recently to make sure my index fund portfolio is “performing well.” Am I correct in guessing this discussion likely doesn’t have my best interests at heart?

Index funds are the worst. Everytime they hit the motherload, they have to sell it early on, so that the portfolio stays &quot;balanced&quot;.<p>You cannot have a fund that has 95% Nvidia, it is (probably) against the law.

Mutual funds have a lot of risk aversion, they even keep some of your money in cash. This poor performance shines through in the up years since the risk aversion wasn&#x27;t needed in hindsight. They&#x27;ll do better than index funds in down years but we haven&#x27;t had one of those in a while now.<p>That&#x27;s ultimately all this is. The fees are similar really but if one puts something like 50% in stocks, 30% in bonds, 10% overseas and 10% in cash while the other puts 100% in stocks the stocks will win if stocks alone were the best investment. That has been true since 2008 but may not always be true.

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