Your Actively Managed Funds Are Unnecessary, and Worse

Your Actively Managed Mutual Funds Are Unnecessary, and Worse

Actively managed funds continue to lose, after fees and expenses, to their passive index fund competition. 

Jason Zweig's recent article in the WSJ suggests exactly what we at Balanced Rock believe - that the investment expertise of most fund managers would be better used helping clients plan and invest appropriately for their personal goals and risk tolerance, rather than charging hefty fees to beat the market while for the most part failing to do so.Balanced Rock was started by a Chartered Financial Analyst with an institutional investment management background with the goal of cutting out the expensive and unnecessary layers of actively managed funds while preserving the crucial elements of financial planning, risk management, asset allocation, low-costs and tax-efficient investing.

To Mr. Ellis, the future for many portfolio managers is clear: “Lots of them are going to have to go find something else to do, because the line of work they originally trained for will be fading away.”

One obvious destination, he says, is financial planning. Tens of millions of Americans need a financial adviser, but only a few hundred thousand advisers are available—many of whom aren’t investing experts. Who better to fill the insatiable demand for financial advisers than former portfolio managers who know firsthand how hard it is to beat the market?

This way, Mr. Ellis says, “investors will get better, more-valuable service from smarter people.”

In short, many stock pickers should get out of the business of managing investments and get into the business of managing investors.

— The Decline & Fall of Fund Managers, Jason Zweig, The Intelligent Investor, WSJ