Adding to the chorus who sing "investment professionals underperform the market" is word from Charlie Ellis. He is only repeating what Frontline made so glaringly obvious. Actively traded mutual funds are loser.
Ellis notes 60% of actively traded funds (where the stock broker is considered informed) unperform their ROI targets. Within 20 years, 70% underperform. And within 30 years, 80% underperform.
Charlie Ellis also notes the funds primary objective is to enrich the fund manager. The almost 1% fees mean you can surrender anywhere from 30% to 60% of your investment to that manager.
Ellis also echos what informed investors have known for quite some time. Exchange Traded Funds (sometimes called Spyders) have fees as low as 0.04%. If investing in index funds, then the ETFs are a best alternative.
However better returns are averaged by purchasing stocks directly. By ignoring investment advise from those who least understand the best investment - investment professionals. By learning what to invest in by learning the company's products.
From Ellis's book:
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…institutional investors will, over the long term, underperform the market because money management has become a Loser’s Game.
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