FYI: Perhaps you smoke cigarettes. If so, you’re aware of the risks. But what if smokers also grew nostril hair (five inches a year) and it was impossible to cut? After four or five years, it would be down to their waists.
Fortunately for smokers, this doesn’t happen. The risks of smoking are all well known. But the same can’t be said for investing in actively managed mutual funds. They carry two well-known risks. The third, and arguably most harmful, isn’t well known.
First, there’s the obvious. Index funds beat most actively managed funds because index funds charge lower fees. According to Morningstar, in the ten years ending December 31, 2017, the typical U.S. Large Blend index averaged a compound annual return of 8.1 percent. The typical actively managed fund in the same category averaged just 6.6 percent.
Regards,
Ted
https://assetbuilder.com/knowledge-center/articles/three-massive-risks-of-actively-managed-funds
