Mutual fund managers are entrusted with a vast majority of Americans’ money; however, they don’t always have the best interest of their clients in mind, according to Forbes columnist Laszlo Birinyi. An investor should be able to pick stocks and manage their mutual funds themselves as well as a manager.

The vast majority of mutual funds lag behind the S&P 500. At a time when the S&P is showing double-digit returns, large-cap growth funds are barely in the black.

Funds are sold, not bought, Birinyi says, and funds are essentially marketing machines first and investing ones second. Managers preach the virtues of buying and holding to their customers. Basically that means that it is okay for the fund manager to have a trigger finger, but the fund investor should stay put, generating a steady stream of assets and fees every year. 

For paying a manager’s fee, an investor gets herd investing. An investor doesn’t have to pay a mutual fund manager a fee to follow the herd nor give up 20% of their gains to a hedge fund manager.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.