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Penn Financial CEO Matt McCall on how investors can boost their portfolio without paying the high fees of mutual funds.
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All right we just mentioned this surprising statistic 79% of large cap mutual fund managers did not did not beat the S&P 500 last year.
That's despite the fact that -- paying them a ton of dough to do better.
As a result my next guest says -- stop paying them so much money.
Our expert Matt McCall CEO -- financial group is here with helpful advice and he knows a thing or two about this or what's wrong with these people we pay them all this money.
Cuts in the my returns this is the worst showing since 1997 what gives.
Well it was a very tough markets argue -- that's blatantly letter was -- the problem is though.
If you don't like to mutual fund that did not really sure what they're buying into they CDs in us stocks -- list that the top ten -- that they held a few months and I think well appeal -- bought apple some clever by as usual but.
The problem is.
I may -- the manager it may be manager who's sixty years old or maybe three kids at twenty years old you.
You don't really know who's investing your money from data day.
What -- actively change -- -- every day they're buying and selling stocks trying to beat the market.
Anybody's ever tried to do that knows how difficult it is and for them to make money what they need to do is charge you a lot of money so not only are you.
Underperforming the index you're paying a lot of money to -- for.
Form that is not a good place to be -- -- -- -- immigration do better they're so Smart and they down.
-- one solution is quite an index fund for the -- a gradual if this that the we did you put up they're -- 9%.
Of the large cap actually managed mutual funds can't keep up with the S&P five -- which is the main index we follow the stock market.
You well there right now I'm by the vanguard S&P 500 -- -- and exchange traded fund trade just take a stock every day combined Seles and defeat for that is point.
06%.
And it's a few pennies on your investment.
-- -- the average -- they're charging right now for actively managed is one point 3% you -- 21 times more.
-- with a one if by chance I mean the odds are in your favorites like sitting down at a blackjack table and tell you you have an 8% chance he'll lose this hand.
Why would you keep going back to that blackjack table.
I I think that's an absolutely perfect way to describe it now -- have an actual example.
-- -- -- And I don't have a written on this particular -- screens so it's actually the iShares emerging market ETF so what this stuff and this -- be a place for you might one sock away some money exactly it -- invest in China Brazil all the big emerging markets.
With in this fund is over 1000 stocks -- -- very diversified they look at the chart here.
This actually outperformed.
And Oppenheimer emerging markets mutual funds who -- the biggest out there.
I mean it it -- of the last five years.
This charge -- expense ratio the the I -- if you have about point 68%.
Where the same time yup I was charging you over 2% year so again -- pay over three times as much to.
Over 500 page are you -- about twenty to 30% plus you're paying an -- you know one point 4% per year -- just.
It makes no sense to be in actively managed mutual fund to me I mean.
I don't -- any of my clients and if we index we will go after her exchange traded funds as things is the only way to go seek out the odds are the odds are that you have -- ability to market its cheap well it's a great way to invest you invest across the entire market.
So you do as well as the market does you don't rely on some buddy to.
-- -- -- for you we say there are occasionally times that you do like.
These actively managed funds -- a special.
Occasions what -- that there's going to be a few managers that are always of course they beat the market you know Bill Miller for years over a decade -- -- -- -- fire and then he added one really bad here is down 50%.
But you that you could find managers -- if you do -- research and due diligence and find funds and you know the -- what they're doing.
Yet there are couple out there but even with when it comes it ETS exchange traded funds.
You can invest in anything -- -- -- investments small cap at.
Agricultural companies you can invest in Indonesia you name -- so there's a lot of opportunities out there I think that's where investors should be looking going forward.
Mac great stuff I hadn't really broke it down for -- I think people feel like they're really apparent to stay with -- black definitely stay away from the lack of carrying out.
