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Will Mutual Funds be a Bad Bet in 2012?

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    Penn Financial CEO Matt McCall on the factors driving mutual funds down.

  • Duration 4:26
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Well if you're an investor you may -- can't wait for 2012.

The average stock mutual fund -- nearly 6%.

And 2011.

So is there any reason to worry can we expect more of the same in 2012 Matt McCall is the CEO -- financial so.

That's half of the story average mutual fund down 6% but the Dow was up 3%.

What is wrong with these mutual.

-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- But this year going back have been a bit about twelve years this is the toughest -- even for me why why because -- deal with headline news.

In the past you invest in stocks that you believe are technically stronger fundamentally strong.

Now you -- with what's coming out of the US government what's coming out of the Greek government.

-- right meeting of the Asian island culinary -- at analyst headline risk it's really hurting me and striving soccer -- But you know if you're looking -- mutual funds there are other issues that reduce their performance there are massive expenses.

They have all kinds of overhead the debut -- a fund investor having to pay for it.

Do you think they're charging too much.

I think they are -- they're -- they're gonna advocates will we have to advertisers with go to twelve B one -- advertiser funds we get money into it with the pain of people that are on our team that are trading that are underperforming.

But you look it.

Mutual -- you look at exchange traded fund history ETFs that the average ETF -- about 15 of the mutual fund and what they do is normally they just tracking index so -- what's called passive investing -- you know we invest in every day we're mutual fund you're actually paying some -- or some girl to trade for you then that's -- -- costs are more funds -- pass of as well there are some exactly negative as they -- -- yes.

-- so one of the things you mentioned is sad that your clients would rather put money in his savings account the take risk and this is my real worry.

Is -- people out there who are behind saving for retirement they're gonna make the choice that.

-- -- -- let's just a mutual but a money market mutual fund would be a better place noble you make no money there until you're losing money against simple yet.

Exactly deflation actually losing money in it in a money market savings account the gold -- or whatever you want to do with -- money you feel safer.

But I but I will tell you like I can almost -- empathize with them because.

You think about the market what's happened the last eleven -- half months it's been a struggle if you look at your count every daily a lot of bestseller doing these days.

It's up 2% down 2%.

All that Harding did they took the last -- and half months and they're down.

Citi skin -- I don't if you look to buy the magazine cash under my bed and dealt with nothing and then better than putting into actively managed mutual fund.

People -- responding I have seen people pull out money out of the market in a big way last year through October this time people pulled up 37 billion this year 84 billion.

People -- stocks to invest for their retirement for their kids education.

You know we've got to find a way where people.

Feel comfortable.

Feel like they trust the markets 12 -- take.

If you think the market actually performing because you look at the action and other markets since 2001.

Really -- tech bubble burst the -- -- 5% and no end at eleven years.

So how do you really convince somebody put money and take the risk that we've had.

Over eleven year period to make about a half a percent per year which after feeding he'd take all the fees out there probably breaking even if you're lucky but -- do you do if you look at history.

History is on our side from 6682.

That's a sixteen year period in Dallas flat from 82 -- -- 2000 now you might Wear what you -- 822000.

If you but said he 500 dollars and doubt you would had 100.

And 171000.

Dollars that you would have made thirteen 100% and now for the last eleven years you've gone sideways and that's typically will be having these period.

So my my we're closer to that break out whether it's next year -- year after we're gonna have a period of a great bull market again but if you're sitting on the sidelines.

You're gonna miss that opportunity invented to really make money -- if you're feeling so you have confidence it's coming back I -- -- I mean really if you believe in America you believe in entrepreneurship capitalism that we have here it's going to come back.

And I think what we -- that was we have major headwinds coming -- -- Europe the US political system but we still love companies making -- for her record profits keep in my last quarter US companies.

After tax profits best.

Ever so that people are making how much I love your optimism that things I thought -- That -- really.

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