Seeking Alpha

A huge exodus from U.S. actively managed mutual funds in June: Investors pulled $19B more out of...

A huge exodus from U.S. actively managed mutual funds in June: Investors pulled $19B more out of the funds than they put in, the most since the March 2009 market bottom, while index stock funds saw $1.1B in net inflows. "Investors are realizing that for a third of the cost they can buy passive funds and pretty much outperform everyone," Josh Brown says. Will this trend pressure the asset management stocks like ACAS, BEN, GBL, JNS, LM, TROW and WDR despite their high dividend yields?
Comments (10)
  • Stone Fox Capital
    , contributor
    Comments (6263) | Send Message
     
    Or maybe they should just invest in the funds that consistently beat the market. Would you take equal odds that the Houston Texans win the Super Bowl or the Pittsburgh Steelers? Thats the problem with this age old debate. Why do we consistently include bad funds in the discussion? No one would blindly bet on a bad club to win the Super Bowl every year.
    15 Jul 2011, 02:16 PM Reply Like
  • Neil459
    , contributor
    Comments (2644) | Send Message
     
    With all the external influences today, you could also just through a dart at the stock listing in the newspaper to determine which company to invest in. This will probably beat the 40% of the market who's only job is too fleece investors.
    15 Jul 2011, 02:26 PM Reply Like
  • Tack
    , contributor
    Comments (13552) | Send Message
     
    Sorry, Mr. Brown, but investors didn't "realize" anything. As usual, after multiple weeks of downward movement in the indices, they got panicky and pulled their money. It would have been a sure sign of a bottom if not for the continuing circus surrounding the debt ceiling. If that's resolved satisfactorily, and the huge fear overhang is removed, this market is going to take off.
    15 Jul 2011, 02:27 PM Reply Like
  • Windsun33
    , contributor
    Comments (4277) | Send Message
     
    Tack you are correct. Basically it was the usual herd panic, not them realizing anything. And every one of the mutual funds in my IRA have beaten the indexes.
    15 Jul 2011, 03:18 PM Reply Like
  • Chris Bersaw
    , contributor
    Comments (587) | Send Message
     
    I'll choose the low cost index funds over the over priced under performing actively managed funds any day.
    15 Jul 2011, 03:38 PM Reply Like
  • Windsun33
    , contributor
    Comments (4277) | Send Message
     
    In my IRA I have 6 Fidelity mutual funds. 4 of them have returned over 14% a year since I moved an old 401k there in 2002. One fund, (FLATX), has returned about 19% annualized. My worst Has returned about 11%. That period includes the various meltdowns between 2003 and now. If I had been able to actively manage that prior to 2010 I probably could have done a lot better by going cash in the 2008 meltdown.

     

    So while the average mutual fund sucks if you glom them all together into one class, it is not that difficult to weed out the one that really suck.
    15 Jul 2011, 08:48 PM Reply Like
  • Chris Bersaw
    , contributor
    Comments (587) | Send Message
     
    That's great, at the moment am limited to a small selection of Fidelity funds of which the ones I'm in some are lagging big time and others are on par with S&P500 with their expense ratios rising over that time.
    16 Jul 2011, 12:15 AM Reply Like
  • Windsun33
    , contributor
    Comments (4277) | Send Message
     
    You need to pick some new funds, if you have a choice. Right now the health care one is probably the best of the bunch, the materials 2nd.
    16 Jul 2011, 12:52 AM Reply Like
  • Chris Bersaw
    , contributor
    Comments (587) | Send Message
     
    Unfortunately my choices of funds are restricted to the limited selection of my plan. Some are underwater and even if the SP500 takes out its 2007 high, doubtful these fund will do the same, they might, eventually.
    18 Jul 2011, 10:42 PM Reply Like
  • Chris Bersaw
    , contributor
    Comments (587) | Send Message
     
    I like dividend paying etf's and higher yielding stocks, they are first on my list of investments, can't beat dividends, the gift that keeps on giving.
    18 Jul 2011, 11:15 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector