Ok I’ve received a few emails about mutual funds so I just thought that I’d share my general thoughts on them. Ok investment advisors plug your ears. In general I think mutual funds are a total waste of money (2% to 3% MER makes a huge difference in the long run) additionally I don’t think that 95% of the fund managers out there are any better than a savvy amateur (because of the amount of money they have to move). I can’t remember the exact stat (and I’m too lazy to look it up) but I seem to remember that it was something like 80% of fund managers don’t beat the market.
That being said there are a few situations that I personally would buy a mutual fund.
1. If I think the fund manager is smarter than me.
2. If I want exposure to a very risky area (ie- biotech)
3. If I want exposure to a market that I don’t follow (ie-outside of North America)
Two of my favorite managers are Francis Chou and James O'Shaughnessy. I’m currently taking a hard look at O'Shaughnessy’s global fund and will probably make a purchase in the near future.