SOAR Jim Rogers Event
Asked on 18 Sep 2019
To a retail investor on the street, how do we ensure that we are buying into the best funds?
Any tips and things to look out for?
If you investing in an active fund, you cannot really tell if the fund will continue to perform for the next decade or so. The type of active funds that retail investors would have access to, typicallly would not outperform the market consistently.
If you are investing in a passive fund that have a broad market exposure with no style bias, then investing in the cheapest fund. For example, there are a couple of S&P 500 ETFs out in the market, SPY, IVV, VOO.
I believe VOO is the cheapest right now at 0.03%. VOO is no difference from IVV and SPY in terms of its underlying exposure. But note that the above ETFs are US-domiciled ETFs and are subejcted to 30% dividend tax withholding.
But you get the idea. Invest in the cheapest ETFs for broad market exposure with no style bias.
And if you are really interested in thematic ETFs, pay attention to what is the investment objective and what is under the hood.
On a side note, I am starting a financial blog. Do check it out.
You can't. It's not that easy.
Fund Fact Sheets are designed to sell, and they will gloss over many stuff, not even showing what they don't need to show you.
Research is a difficult job.
That is also why I like index ETF over any funds. nothing to hide because they nothing to show anyway ;)
My personal favourite is IWDA.
Technically when You look at the longterm price chart in the fact sheet:
it is rare that the fund price is better than a passive index depicted in the chart,
same thing: 5 y and 10 y performance tables for fund versus index.
there are no really fund manager heroes, at least with stock mutual funds.
try to find the Bill Miller story (Legg Mason) on the internet.
some mutual fund managers are successful,
but only very rarely so robustly for more than 15 years compared to passive indexing
Conclusion: avoid mutual funds/unit trusts, instead think passive indexing ETFs