No Load Fund Investing For Busy People

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I referenced articles from before, but their latest one did not sit well with my kind of thinking. It’s titled “Great Investments for Busy People” and quotes Vanguard founder John Bogle as saying that mutual funds were the finest vehicles for long-term investing ever designed. I can agree with that and realize that his statement was probably made prior to the ETF revolution.

The article goes on to list a few items of importance for you, the busy professional, to look at when evaluating mutual funds. Here’s what it says.

Among other things, when you’re in the market for a mutual fund, you should ask:

1. How long has the fund’s manager been at the helm? At least five years (and preferably longer) is the answer you’re looking for here.

2. How has the fund fared on that manager’s watch? Past performance doesn’t tell you a thing about a fund’s prospects if it doesn’t reflect the work of its current stock-picker-in-chief.

3. Does the manager invest in his or her own fund? If not, why should you?

4. How has the manager fared in up markets and down? When you have a talented manager at the helm, market slumps can represent prime buying opportunities — and juicy gains for shareholders over the long haul.

While I am not totally in agreement with any of the points made, the last one in particular shows the usual ignorance. Okay, some fund managers do better in up markets than others. However, when a prolonged down market hits, it doesn’t matter whether the manager is “talented” or a “beginner.”


If a fund’s objective is to be long in the market, all portfolio holdings will head south in a bear scenario. Talent and experience won’t help. Unless, of course, the “talented” manager is able to outperform the S&P; 500!


Say, the S&P; lost some 20% in a bear market year, and the “talented” manager “only” lost 18%. This performance would most likely elevate him to hero status in the perverse way Wall Street keeps score.

If you had owned the fund that lost “only” 18%, would you be feeling like a hero too?

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