So let me further explain my "disdain" for Funds.... The above mentioned fund has a "decent" performance. It almost mirrors the S&P500 --- almost exactly --- usually the S&P 500 is what fund managers are looking to "BEAT" --- otherwise they're just considered average and they get looking for work...
All a person has to do -- is to look at the holdings of this fund --- and duplicate it's top ten holdings (if you have that kind of funds to invest)... and you can do so with NO FEES of any kind... no minimums... it's open to anyone at any time - and you can choose to re-invest the dividends or just have them put as cash into your account... in other words -- you can build this same fund --- and have some control over what you want to do and how.... and there's no "expense" associated with it. So then - why just buy a "fund".
Here's their top ten holdings....
AAPL
Apple Inc
Computers & Peripherals
XOM
Exxon Mobil Corporation
Oil, Gas & Consumable Fuels
GOOG
Google, Inc. Class A
Internet Software & Services
MSFT
Microsoft Corporation
Software
GE
General Electric Co
Industrial Conglomerates
JNJ
Johnson & Johnson
Pharmaceuticals
CVX
Chevron Corp
Oil, Gas & Consumable Fuels
PG
Procter & Gamble Co
Household Products
JPM
JPMorgan Chase & Co
Diversified Financial Services
WFC
Wells Fargo & Co
Commercial Banks
So here's my point ---- they probably have 100 plus companies in this fund --- but my guess is that the top ten did all the heavy lifting (performance) and the bottom 20 pull their averages down... so why have the bottom 20 in your portfolio?? Most funds are just giant pools of "average". We strive to be better than average don't we??
So here's another "issue" I have with INVESTING 102 and funds... and that's the research and the details. Now -- I've been doing this a long time --- and I can sort thru lists and details and pick stuff apart in a nanosecond... but I'm not so sure a lot of you can do this and might get fooled by the big numbers and not parse out the larger details. So for example I just did a sort research via Schwab for all the MORNINGSTAR 4 star rated funds.. and then I sorted them by "returns since inception" ----- killer! I should get a list of the very best returns right? So the top one has a 20% "return since inception".... holy cow -- I want in that bad boy -- it's killing it. Well -- but it only started in 2009 --- right when the market turned UP -- and actually - 20% since then is pretty average performance. The "since inception date" is very small --- and how many would have picked up on that?
Then --- once you start to have money in 4 or 5 funds ---- what's your overlap?? How many are going to go look at what the fun is made up of. Microsoft can be in a TECH fund -- it can also be in an S&P Large Cap fund -- or a Large cap blend fund... so while you'd think you were "diversified" you may in fact have a bunch of duplication.
So for me --- funds are "fine" if that's all you have available to you -- and you just want to be investing thru work.... and you don't want to do a dang thing for yourself. But that's why we have 360 pages of posts here... it's about doing a minimum amount of work (which is actually fun -- it's really more like shopping) and building your own "mini fund".
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