Bonnie, Let's not forget the tax implications!
Mutual funds obviously foster and encourage the Buy and Hold mentality. Most mutual funds are very tax inefficient, since the average domestic equity mutual fund has a turnover ratio of 88%.
Additionally, the folks in mutual funds with a low turnover ratio will be in for a big surprise when the BK does arrive. As bond fund holders found out in '94, its not a lot of fun to see the NAV go down and big taxable dividend distributions at coming into the tax return.
As I've said to you before, I agree with your concept. Forget the mutual funds, buy the stock of the publically traded ones.
The same goes for SPY versus mutual funds in general. Much more tax efficient, lower expense ratio, and better performance than 90% of the funds. An exception exists for "specialty" funds where the manager's expertise and diversification is of importance.
Berney |
