Rich Snail

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There are thousands of funds around the globe. All of them doing similar things in many different ways. The fun of the game is to find the fund which will suit your need and objectives; there always is one thing not to forget though: your fund needs to outperform the markets! There’s little value in picking a fund if it does not beat indicators.

Picking the right fund can be difficult, especially when you are no specialist and are trying to get consistent returns. Even the best of managers know off-years. As a result of this, you are very likely to end up with an average performing fund, which may beat the market,but only by a thin margin. Furthermore, your average performance will suffer from the trading and management fees you will have to pay to the manager – there are few Berkshire Hathaway.

Many investors do not wish to take these risks, yet want to enjoy the profitable long term growth of the stock markets. They want to achieve diversification, so as to not put all their eggs in the same basket, seeing their profit being taken away by hefty management fees.

Such investors likes to base their portfolio on passively managed funds - indexed funds and exchanged traded funds. These type of funds enjoy very low management fees since they do not require any research — they simply monitor the index so as to mimic it. They also give investors an easy “15-minutes-do-it-yourself” diversification strategy.

I see such funds as base to build from a great portfolio. I so highly think of them that I decided to further introduce Index Funds and Exchanged Traded Funds in soon to come posts – a little teaser never hurts