Why do mutual funds get such a bad rap on here?

[Uglyowl]

I know that the majority of mutual funds out there are garbage, but as consumers we get to review all the information about each fund and make our decision based on this.

There are some very very smart people on Wall Street and to utilize their services for part of your portfolio is a wise move for most.

Let's look at the market averages for 2005:

Dow <font color="red">-0.61% </font>
Nasdaq +1.37%
S&amp;P +3.00%

Now let's look at the largest 25 mutual funds in this relatively flat year for 2005 returns.
<ul type="square"> [*] American Funds Gro;A 14.23%[*]Vanguard 500 Index;Inv 4.77%[*]American Funds ICA;A 6.87%[*]Fidelity Cash Reserves 2.93%[*]American Funds Wsh;A 3.55%[*]Fidelity Contrafund 16.23%[*]PIMCO:Tot Rtn;Inst 2.86%[*]Fidelity Magellan Fund 6.42%[*]Dodge &amp; Cox Stock 9.37%[*]Vanguard Prime MM;Inv 2.99%[*]American Funds Inc;A 3.14%[*]American Funds CIB;A 4.46%[*]American Funds EuPc;A 21.12%[*]Schwab:Money Mkt 2.54%[*]American Funds CWGI;A 14.72%[*]Vanguard Instl Indx;Inst 4.91%[*]Vanguard 500 Index;Adm 4.87%[*]Fidelity Lw-Prcd Stk 8.65%[*]American Funds NPer;A 11.28%[*]American Funds Bal;A 3.12%[*]Fidelity Gro &amp; Inc 2.71%[*]Fidelity Dvsd Intl 17.23%[*]JP Morgan:Prime MM;Cap NA[*]Vanguard Tot Stk Idx;Inv 5.98%[*]Vanguard Windsor II;Inv 7.01%[/list]
Eliminating the MM funds and international funds 15 beat the S&amp;P while 4 did not.

The average of these 19 domestic funds was 6.03% gain, handily beating the market.

While there are alot of "bad" fund managers and they get alot of press, i.e. a handful SEC investigations, some analysts tripping over themselves with outrageous claims during the tech boom of the late 90's (i.e. Amazon.com going to $1,000!), there are alot of fund managers to utilize that are brilliant in what they do.

I guess my message is don't be ashamed if you invest some money in mutual funds as there are some great ones out there! It is just another tool to make your money work for you.

[kagame]

WOW!

Trained professionals managed to do twice as well on average as a passive tracker of the S+P 500!

This service is obviously worth us paying out billions of dollars a year in transaction costs and fees!

Im sure i couldnt do better than this with a little bit of dilligence and a service like motley fool, oh no!

[Sniper]

[ QUOTE ]
WOW!

Trained professionals managed to do twice as well on average as a passive tracker of the S+P 500!

This service is obviously worth us paying out billions of dollars a year in transaction costs and fees!

Im sure i couldnt do better than this with a little bit of dilligence and a service like motley fool, oh no!

[/ QUOTE ]

I just want to point out that he didn't post the Top 25 funds for the year... he posted the 25 largest funds!

While mutual funds generally get a bad rap as not being able to outperform the indexes, this year a significant number did. That doesn't mean that they will outperform next year, but it does mean that mutual funds shouldn't be completely ruled out as a way to outperform the market!

Individuals with the time to do their own research have many advantages over funds, but, not everyone has the time or desire to do their own research!

[ChromePony]

Im looking to get into some mutual funds in 2006. Any quick suggestions for markets or sectors that might have a future this year, international, domestic? I'm up for doing the research but I really dont know where to start.

[Sniper]

[ QUOTE ]
Im looking to get into some mutual funds in 2006. Any quick suggestions for markets or sectors that might have a future this year, international, domestic? I'm up for doing the research but I really dont know where to start.

[/ QUOTE ]

Best Sector Bets thread

Evaluating Managed Funds

[ChromePony]

[ QUOTE ]
[ QUOTE ]
Im looking to get into some mutual funds in 2006. Any quick suggestions for markets or sectors that might have a future this year, international, domestic? I'm up for doing the research but I really dont know where to start.

[/ QUOTE ]

Best Sector Bets thread

[/ QUOTE ]

Thanks, I just read through Ed's thread too, also rather helpful if anyone else is looking for similar info.

[krishan]

Can you link the place where you found the data or provide tickers for the Mutual funds? Thanks,

Krishan

[Uglyowl]

Try the morningstar mutual fund screener

http://screen.morningstar.com/FundSe...n=ToolScreener

Also others have mentioned some great funds in the past month if you do a quick search.

[Mark Heide]

Hi Uglyowl,

Mutual funds get a bad rap due to management fees that you have to pay on them. Plus, performance of a fund for a year is not a good indicator of how that fund will perform in the long run. If you are going to pick a fund, look at a longer history, at least 5 years, and see if it outperforms the S&amp;P 500 index, or if you don't want to do any work, just buy an S&amp;P 500 index fund.

Good Luck

Mark

[Redd]

So why are so many of the index funds that OP mentioned doing so much better than the market averages? Am I misreading something?