Why Your Money Manager Can't Beat An Index Fund

There are so many reasons why money mangers can't even beat the average return of the stock market. They charge annual expenses that are grotesquely higher than simple index funds, they experience high turnover, they mismanage accounts, they make big bets that don't pay off, etc. But Alexander Green at Wall Street Daily points to reasons how the manager mangers try to escape scrutiny for their relatively poor performance. Because there is a strong incentive for money managers to make it look like they are beating the broad stock market (otherwise, why would you invest with them?), and often, they have to mislead investors in order to do so. They compare their performance to the stock market (without including reinvested dividends), and they resort to other low-brown tactics to try to enhance their record. Of course, this does a huge disservice for the average investor who is paying the higher fees in hopes of beating the market over the long haul. Because the interests of money managers are so skewed, you would be wise to do your homework and follow-up on the claims of your money managers to see if they are trying to unfairly portray their investment results in a better light than is deservedly so. If you want to read Mr. Green's Wall Street Daily article on the subject, visit here: http://www.wallstreetdaily.com/2011/06/30/money-managers-not-beat-market/ .