Those of us in the financial media make big deal out of the results, which always show significant underperformance by actively managed mutual funds across almost all asset classes in both stocks and bonds.
The financial media loves to reference the wisdom of “investing pros.” This article is representative. Here’s the headline: Opinion: ‘No disrespect’ to Warren Buffett—but some investing pros says he’s dead wrong about this stock. The “pros” quoted are editors of “top performing newsletters”.
I’ve been a fan of robo advisors, almost since their inception. Most of them recommend portfolios of low management fee index funds in globally diversified portfolios. Their advisory fees are low. Recently, I’ve seen some cracks in the robo advisor façade.
The securities industry is celebrating. It has successfully killed an Obama initiative that required brokers to put the interest of their customers ahead of their own. Registered investment advisors continue to have this obligation (known as a fiduciary duty).
With active management, you pay a premium for the likelihood of underperformance.
It turns out the smug bearded guy featured in the Raymond James commercials doesn’t have a clue about sound and responsible investing, based on solid academic evidence.