Managed Mutual Funds

We have all had questions on Managed Mutual Funds before. Below are the top questions posed by visitors just like you to our. We hope our answers located below will help you solve your funding problems today. Feel free to ask another question, or even comment on what has been written.

There has been a lot of debate recently regarding Managed Mutual Funds, and it is therefore critical for you, the reader, to grab all of the information that is out there on the vast topic of funding. Your funding can have a huge impact on your future, so don’t procrastinate any longer. Read up on Managed Mutual Funds today!

Gordon Said:

Are TSP mutual funds actively or passively managed?

We Answered:

i think they are passively managed. the reason i say this is because they are matched to the performance of certain indexes.

for example the C fund is matched to the SP 500. I think they are called index funds. the various funds are matched to various indexes

i guess they are called index funds

Don Said:

What type return should be expected from a managed mutual fund portfolio relative to a comparative index?

We Answered:

OK, the general principle is that you will underperform the index by the amount of fees you are paying. But because fund returns go up and down and some funds are lucky and some unlucky, that is only a general principle.

This is why index funds are great. They are low-cost and tax efficient and underperform the market by their expense ratio (internal management fees). Over time, 80% of managed funds underperform the companion index fund. If you didn't pay loads or a higher expense ratio or 12b-1 fees, that number would be much different.

Here's a shocking example. I was comparing returns for a VUL - which is a high expense insurance police and also an investment (has mutual funds in it).

I compared the return on the S & P 500 fund in the VUL to the Vanguard S & P 500 fund - apples to apples, except for the fees.

The return on VUL S&P 500 Index Fund2: 6.85%
Vanguard's S & P 500 Index fund: 11.77% !!!!!!!!

THIS is what fees do to returns. Yes, some high cost funds will beat their index, but almost always not consistantly.

So, you need to find out what your fees are. ALL the fees. I suggest you use Morningstar.

Also, you need to read this:

http://www.bankrate.com/brm/news/BoomerBâ€¦

http://money.cnn.com/2006/03/05/news/newâ€¦

The more I learn, the more certain I am that the financial advising industry is a sham.

Very good question.

Tyrone Said:

Why do Motley Foolâ€™s experts advise individuals to invest in index funds rather than managed mutual funds?

We Answered:

Because they can be traded during the open market, not just at the end of the day, and don't carry penalties for buying and selling

Arlene Said:

I hold shares of Columbia Managed Mutual Funds, a Bank of America subsidiary,how do I file a claim for mi?

We Answered:

This sounds like a class action lawsuit. If this is the case, you should have received a notice in the mail informing you how to OPT OUT of the lawsuit. Othewise you are usually automatically included, and you should receive a credit in your account eventually (hope you aren't expecting it soon). I wouldn't bother, it more likely will be under $50. But if you have any questions, go ahead and contact Columbia.

Thelma Said:

Are there any portfolio managers that manage mutual funds or ETFs to go up in both expansions and recessions?

We Answered:

That's a good question, but there is an answer.

First, any given mutual fund is set up with rules set by their company that basically handcuff the fund manager. Only a certain percentage of money can be in cash at any time, and they must buy stocks that meet certain set criteria and generally have to hold long positions, not short. They can't for example, switch to selling short when they think the market will go down.

Second, guess how funds - and fund managers - are evaluated? They are compared against similar funds! So if your fund went down "only" 10% where the average for that type of fund was 20%, your fund manager was a big hero to upper management of his company. Sounds crazy, but that is the way they operate. There is no incentive to be creative in a down market because all they have to beat are their peers, who are not reacting to the down market either.

Third, mutual funds handle immense amounts of money. They can't "turn on a dime" like an individual investor. If a major fund sold all of their stock at once or in a short period, it would greatly increase the volatility of the market and hurt all investors.

Louise Said:

Do you invest in index or actively managed mutual funds?

We Answered:

Actively managed funds are designed for fools..

Have you ever wondered why the managers' literature for such funds, never shows you the effect of charges after say, 40years? Because if they disclosed it no one would buy them.

Floyd Said:

If 80% of actively managed mutual funds perform bellow market average, why are we still doing this?

We Answered:

Go with index or growth stock funds.

Managed Mutual Funds

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