Active vs Passive ( indexing ) the truth investment sales people do not want you to know

http://sensibleinvesting.tv -- the independent voice of passive investing Author of a Random Walk Down Wall Street, Burton Malkiel explains how index (passiv...

An uncomfortable truth … and the reason to examine Regulation; Technology Disruption; and Convergence – the topic of ETFinsight’s upcoming Mar 3+4 Ottawa event.

Few mutual funds beat the market , even fewer consistently
You are voluntarily paying a tax to under perform.
Believe the academics not sales and marketing people out to empty your pockets for their own good.

Compensation shapes behaviour (Prof. Edwin L. Weinstein, PhD) + yes, the financial industry needs to be paid and be healthy.
The presence of Trailer Fees skews fund flows – resulting in a suboptimal allocation of capital (Prof. Douglas Cumming).

The problem most investors run into in the elusive quest for alpha is that they end up taking on unnecessary risks that they don’t understand. Not only that but they open themselves up to taking on risk that is perfectly avoidable.

Successful investors look to control risk, first and foremost, with the understanding that the returns will come eventually.

Have you heard the term management expense ratio (MER) but never knew what it meant? Find out how it affects the returns on your investments.

Active management 2.5% t0 3.2% usually doesn't even achieve market returns, indexing if you DIY 0.25% if you want some help 1 to 1.5% and will get market returns with less volatility than active

The new sales pitch for the high fee active manager goes something like this: "passive investing has gotten so large that this creates greater opportunities
All in all, I don’t see the rise of indexing as being problematic for the real economy or the financial markets.
In fact, I see the rise of indexing as an overwhelming positive for consumers as it creates access to liquid markets at very low costs

Only the sales people are smiling not the clients

We lack a fiduciary standard ( put clients interests first)
so its Ok to sell you under performing investments that cost 10 times what other things cost.
The average mutual fund under performs the market by 10% and eats 1/3 of your savings every 13 years in fees

Now who is smiling?

Morningstar is a research company that advisors rely on for fund research to sell you these things but conveniently ignore this research

“There's a belief that active bond fund managers can be better stewards of investing tied to the macro economy,” Mr. Rosenbluth said. “And bond investing is more complicated, and it's hard for the advisers to do it themselves, so they're more willing to pay for help.”

Trouble is, most investors in actively managed bond funds aren't getting much help, and in most cases they would be better off in an indexed fund.

A closer look at how the active bond fund categories stacked up against the benchmarks in the S&P report shows some wide performance gaps in certain categories.

A documentary created by a financial education website in support of passive
investing is attracting criticism. Director Robin Powell explains why

In fact I’m really quite heartened by the abuse that I and fellow campaigners for a fairer, more transparent investment industry have started to attract. I even managed a smile when a highly successful American fund manager suggested that those who rock the active boat “will surely rot in hell”. It’s certainly an improvement on being ignored.

It was Gandhi who said “First they ignore you, then they ridicule you, then they fight you, and then you win.” We’ve reached the ridicule stage already. And we’re ready for a fight.

How often have we heard the “He said, she said” argument?
The active versus passive investment industry is not immune to this. In the investment industry, “she” is correct and her name is SPIVA® (S&P Indices Versus Active).
You see, Mr. Active is being a bit of a rascal and not necessarily telling us the entire story. Mr. Active’s story has some holes in it...hmm! This reminds of the Collin Raye song titled “That’s My Story (and I am sticking to it).
A while back we discussed how numbers lie, just like in this case. Mr. Active is also seems to be guilty of the sin of omission. What is this Active rascal not telling us. If you’re as intrigued as I am, let’s watch and find out together.

Financial guru John Bogle, founder of the Vanguard Group, on the simple advice he received at the start of his investing career: "Nobody Knows Nothing".
Finding an advisor smart enough to admit you may as well just buy the market isn't easy though most have been brainwashed into active management and stock market chasing
If they are so good at guessing why are they not living on a private island somewhere ?

Theres two sides to every argument and money isn't math but sometimes we have to believe the date and not be emotional

A new report has shown once again that past performance do not predict future success

Sorry but this is one broken record worth listening to … - Financial Independence Hub month S&P Global published its 2016 mid-year SPIVA Canada Scorecard, which compares the performance of actively managed Canadian-based mutual funds with their benchmarks.
None off the US managers beat the benchmark?
14% of the international did
29% of canadian fund managers beat the market bench mark

Fee-only financial planning, money coaching, net worth management is about making the most of what you have. No products sales pitch, just the truth. Working...

Isnt the definition of insanity doing what you always did? Stop using mutual funds. In the last 5 years none of the Canadian fund managers running US funds b...

Fee-only financial planning is for anyone who wants to get organized and make the most of their finances without feeling like they are being sold a product. ...

Warren Buffett in 2007 bet $1 million that index funds would outperform hedge funds over 10 years. Now, it looks like he will win the wager.

And their results don't get any better over the long term.