Index Funds Vs. Actively Managed Funds

by James Hendrickson on April 29, 2013 · 2 comments

Hello All,

For the majority of Americans mutual funds are a great way to get exposure to stocks.  However, there is an ongoing debate in the mutual fund world as to whether actively managed funds are better than index funds.  If you’re unfamiliar with this debate, you might consider checking out the following video from Kiplinger – it lays it out pretty well in under 3 minutes.

Just as an aside…if you are looking for well managed active mutual funds we like the following:

DODGX: Dodge and Cox Stock Fund

IDGTX: ING Global Real Estate Fund

IDROX: ING Real Estate Fund

All three of these funds have made us money consistently for the past 10 years.

We do not like any of TIAA-CREF’s family of funds. They have a remarkable talent for underperforming the S&P 500 and charging a lot for it.

Best,

James

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{ 2 comments… read them below or add one }

1 DC @ Young Adult Money April 30, 2013 at 4:05 pm

Thanks for the tips, James. I am just now starting to look into investing more and want to learn as much as possible. I’ll have to check out these mutual funds.

2 James May 1, 2013 at 6:47 am

Hey DC,

Thanks for the note. I think its important to look at mutual funds along a variety of metrics. Three good ones are:

1. Lifetime performance of the fund: How has the fund done in both up and down markets?
2. Quality of management: Are the managers from the best schools? Do they have smart things to say? How much experience do they have? What kind of experiences do they have?
3. Price: Lower is better.

Hope your investing is going well.

James

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