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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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The Downside Of Knowing A Lot About Your Mutual Fund

FYI: George Mason professor says more mutual-fund disclosure may be a case of too much information.
Regards,
Ted
https://www.wsj.com/articles/the-downside-of-knowing-a-lot-about-your-mutual-fund-11564971181?mod=article_inline

Comments

  • edited August 2019
    Baloney.

    Awful article.

    And in WSJ no less.

    I'll chalk this up to false-correlation.

    I scratched my head and it started to rain ...
  • @MFO Members: Charles said, "I scratched my head", I've got just the answer. Its called Head & Shoulders !
    Regards,
    Ted:)
  • edited August 2019
    This must be the corollary to: “The Downside of Knowing A Lot About The Markets”.
  • Ha! Yes, I agree.
  • On both counts!
  • At the risk of appearing to be a spoil-sport here, I can see where the headline makes sense. I will admit to not reading the article, though it wasn't for lack of trying. I just don't have a paid subscription to WSJ. The article may have covered what follows, so if it does, cut me a little slack.

    When considering a new fund for our portfolios, how many of us here at MFO actually read the full prospectus cove-to-cover? My concerns are typically the fund's objective, long-term past performance, manager stability, and fund costs including ER and transaction fees if they apply. I use 'free' M*'s data regarding risk, upside/downside, mean return and standard deviation of returns. BTW, I have NO index funds; they're all actively managed. I'm willing to eat ER - within reason - on the upside IF the manager has proven his/her ability to shepherd on the down side.

    I seriously doubt that the average mutual fund investor - and my assumption is that most are investing through 401(k) and 403(b) plans - could not care less about "what's under the hood", and might find reading through a full prospectus as opposed to a fund's marketing one-page cut-sheet not only intimidating but pointless. Would adding a few lines that identified the Sharpe Ratio, the Sortino Ratio, or some other metric REALLY help the average investor, or would it lead to paralysis-by-analysis?

    One should not need a PhD in a STEM-related field to understand what one is buying and the risks/rewards associated with the product. I'm in favor of LESS BUT BETTER information. YMMV.
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