A Quote by Paul Samuelson
In every mutual fund prospectus, in every sales promotional folder, and in every mutual fund advertisement (albeit in print almost too small to read), the following warning appears: "Past performance is no guarantee of future results."
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Mutual fund managers are trapped in this rather deadly vicious circle: the more successful they are, the more money flows into their mutual fund. Then, it is more difficult for them to beat the market averages or even to match their own past performance.
I believe Washington should be a more active participant focusing on the issue of why corporate shareholders and mutual fund shareholders are not given fair treatment by corporate management and mutual fund management. We need to develop a national standard of fiduciary duty to ensure that these agents, if you will, are adequately representing the principles - pension beneficiaries and mutual fund shareholders - whom they are duty bound to serve.
I have become increasingly convinced that the past records of mutual fund managers are essentially worthless in predicting future success. The few examples of consistently superior performance occur no more frequently than can be expected by chance.
A Financial Research Corporation study determined that the expense ratio is the only reliable predictor of future mutual fund performance.
There may be less of a chance of losing all the money you put into a mutual fund than there is of losing all the money you put into lottery tickets, but you're never going to win big in a mutual fund.
My favourite holdings are Vanguard's Wellington Fund, a balanced mutual fund which is a legacy investment from my first career at Wellington Management Co., and the Vanguard 500 Index Fund.
Surprise! The returns reported by mutual funds aren't actually earned by mutual fund investors.
Experience conclusively shows that index-fund buyers are likely to obtain results exceeding those of the typical fund manager, whose large advisory fees and substantial portfolio turnover tend to reduce investment yields. Many people will find the guarantee of playing the stock-market game at par every round a very attractive one. The index fund is a sensible, serviceable method for obtaining the market's rate of return with absolutely no effort and minimal expense.
An index fund is a fund that simply invests in all of the stocks in a market. So, for example, an index fund might invest in every single stock or almost every single stock in the U.S. market, it might invest in every single stock abroad, or it might invest in all of the bonds that are out there. And you can make a perfectly fine investing portfolio that mixes equal parts of all three of those.
Mutual fund manager performance does not persist and the return of stock picking is zero.
The average person can’t really trust anybody. They can’t trust a broker, because the broker is interested in churning commissions. They can’t trust a mutual fund, because the mutual fund is interested in gathering a lot of assets and keeping them. And now it’s even worse because even the most sophisticated people have no idea what’s going on.
As a portfolio manager, when do you start advising to your clients that they have some cryptocurrency exposure? When will there be an index fund, a mutual fund of cryptocurrencies? It will happen.
Index funds are the only rational alternative for almost all mutual fund investors.
There are a lot worse things you can do with all your bucks than giving them to even a mediocre mutual fund - such as, for example, giving them to a mediocre hedge fund. If supporting the lifestyle of a mediocre fund manager is your favorite charity, who am I to stop you?
Among my greatest disappointments about the mutual fund industry - in addition to excessive costs and excessive focus on the short-term - is that fund managers have been passive participants in corporate governance.
The fund scandals shined the spotlight on the fact that mutual fund managers were putting their interests ahead of the fund shareholders who trusted them, which had much more substantial consequences in the form of excessive fees and the promotion - as the market moved into the stratosphere - of technology funds and new economy funds which were soon to collapse.
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