Any information about mutual funds?

[Kevins]

Why would anyone invest in mutual fund vs index fund? I am new to the mutual fund world, but have heard opinions from various “trusted resources”. Any enlightening comments?

[DanielCarrera]

Why would anyone invest in mutual fund vs index fund? I am new to the mutual fund world, but have heard opinions from various “trusted resources”. Any enlightening comments?

Are you asking why anyone would choose a managed fund instead of an index fund? I can think of a couple of reasons:

1. They are deceived into thinking that the fund manager can beat the market.
2. They don't have access to an index fund targeting an asset class they are interested in.

Does that answer your question or did I misunderstand what you were asking?

[mr_raider]

Are you asking why anyone would choose a managed fund instead of an index fund? I can think of a couple of reasons:

1. They are deceived into thinking that the fund manager can beat the market.

That's the sad truth >:(

[YYZFA]

Are you asking why anyone would choose a managed fund instead of an index fund? I can think of a couple of reasons:

1. They are deceived into thinking that the fund manager can beat the market.
2. They don't have access to an index fund targeting an asset class they are interested in.

Does that answer your question or did I misunderstand what you were asking?

These reasons can be true, but I can think of some reasons why a managed mutual fund might be better for some people. The main one is that the individual's risk tolerance might not be very high. I know many people who are cautious investors, and they'd rather have a balanced fund. They'll trade off the chance of high return for safety. Index funds are very volatile, and many people are uncomfortable with them.

[DanielCarrera]

These reasons can be true, but I can think of some reasons why a managed mutual fund might be better for some people. The main one is that the individual's risk tolerance might not be very high. I know many people who are cautious investors, and they'd rather have a balanced fund. They'll trade off the chance of high return for safety. Index funds are very volatile, and many people are uncomfortable with them.

This is ridiculous. Risk tolerance has NOTHING to do with managed vs index funds. Risk is adjusted through asset allocation.

A "balanced" fund is nothing more than a fund that invets X% in stocks and Y% in bonds. Didn't it occur to you that you could do the same with other funds? You know, you could divide your money and put X% in your favourite stock index fund and then put Y% in your favourite bond-index fund. Voila! Like magic, you have a balanced set of index funds. Didn't it occur to you that asset allocation is possible with index funds too?

Trying to use asset allocation as an argument against index funds is as absurd as saying that the book that is lying next to the lamp is better than the one on the shelf because you can read better with light.

[squid]

Would a ETF tracking a short term bond index really be more volatile than a emerging market mutual fund?

[Fallschirmjagr]

Why would anyone invest in a fund at all?



regards,

[YYZFA]

This is ridiculous. Risk tolerance has NOTHING to do with managed vs index funds. Risk is adjusted through asset allocation.

A "balanced" fund is nothing more than a fund that invets X% in stocks and Y% in bonds. Didn't it occur to you that you could do the same with other funds? You know, you could divide your money and put X% in your favourite stock index fund and then put Y% in your favourite bond-index fund. Voila! Like magic, you have a balanced set of index funds. Didn't it occur to you that asset allocation is possible with index funds too?

Trying to use asset allocation as an argument against index funds is as absurd as saying that the book that is lying next to the lamp is better than the one on the shelf because you can read better with light.


My opinion is "ridiculous" and "absurd"? Okay . . . that's an interesting response.

Yes, it did occur to me that you can buy several index funds and choose the allocation that you prefer, to minimize risk. In fact, that's what I do. I said that some people are not comfortable doing that, because they do not understand investments. They either do not have the time or the interest to learn. We all can't be knowledgeable in everything. One has to be comfortable with their investments, and index funds are not for everybody.

[DanielCarrera]

I said that some people are not comfortable doing that, because they do not understand investments.

That is not what you said, though it was probably what you meant. Anyways, a balanced fund is not the solution, why should you think that that particular balanced fund suits you? The right solution is to talk to a financial adviser. Hopefully one who doesn't get kickbacks from the fund companies.

One has to be comfortable with their investments, and index funds are not for everybody.

Index funds *are* for everybody. DIY investing is not for everybody. But index funds are not the same as DIY investing. Nothing stops an advisor setting up a series of index funds for you. Some advisors do that (not enough do, but that's a different problem).

[wheel]

nm

[red120]

This is ridiculous. Risk tolerance has NOTHING to do with managed vs index funds. Risk is adjusted through asset allocation.

A "balanced" fund is nothing more than a fund that invets X% in stocks and Y% in bonds. Didn't it occur to you that you could do the same with other funds? You know, you could divide your money and put X% in your favourite stock index fund and then put Y% in your favourite bond-index fund. Voila! Like magic, you have a balanced set of index funds. Didn't it occur to you that asset allocation is possible with index funds too?

Trying to use asset allocation as an argument against index funds is as absurd as saying that the book that is lying next to the lamp is better than the one on the shelf because you can read better with light.
+1

I have to admit, sometimes I love this man.