[NajdorfDefense]

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Ummm... when you say "open your eyes" are you talking about OP or me?

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OP, sorry for the confusion.

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Of course mutual funds trail the market. Mutual funds, in aggregage ARE the market, but with fees layered on and, generally, modest cash balances holding them back in up markets (which are more common) and helping them in down mkts (less common). THey also have transaction costs, which are negligible in indexes.

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Mutual funds are what most people are invested in, and the fact they can get away with subpar returns while pocketing enormous profits says a lot about the investment community.

The same principle certainly applies to financial planners although it's impossible to back that up statistically.


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As a whole, everyone will get market returns, less fees. Cheaper the fee, the better your chance of outperforming. This applies to all funds and investments and planners, but gross of fees, for any fund/planner that loses to the market, someone must best the market, by definition. [Fees can reverse that, obviously.]

The important thing is too look at risk and return. The 'index' everyone is making reference too [95% of the time] is the SP500 which is *only* large-cap, US stocks.

That is not a proper allocation, that is throwing one dart and hoping it does well, at one small sub-sector of the investing market. Should it be a part of your portfolio? Sure, it's cheap, somewhat tax-efficient, easy to buy, and you get a fairly good correlation to that sector. But that leaves every other part of the investing world incomplete.

Interview several planners, educate yourself, ask people you trust for advice, do a little homework, and see what you like based on your risk/return tolerance.