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Article: Rules for making money with mutual funds: mutual fund investing has several drawbacks as well as distinct advantages.
- Article from:
- Money Digest
- Article date:
- October 1, 1999
- Author:
CopyrightCOPYRIGHT 1999 Money Digest. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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In recent months there has been a proliferation of articles and books pointing out the pitfalls of mutual fund investing. And the pitfalls are real. Just consider the following:
* A large majority of mutual funds fail to beat the market indices. In other words, although we pay for the stock picking skills of the fund manager, we do not end up with better performance. For instance, over the past 10 years, only 8.7% of Canadian equity mutual funds beat the TSE 300 index. Such underperformance is true not only of Canadian equity mutual funds, but of U.S. and international funds as well.
* The management expense ratio or MER (the amount a fund charges to ...