“As some investors already understand – and so many more still don’t — mutual funds are expensive, tax-inefficient, outdated investment vehicles. And yet, more than half of American households own a mutual fund, helping power an $11.6 trillion industry.
That’s a market that isn’t going away anytime soon – but it’s certainly one that investors can and should be a lot smarter about if they choose to keep mutual funds in their portfolios. So here’s a basic question for any prospective buyer: Are the biggest and most popular mutual funds really worth your money?
The answer isn’t as easy to find as you might think: While Morningstar and many other companies provide ratings on mutual funds, they look at them in isolation of the greater marketplace. They analyze and compare mutual funds only to other mutual funds – which are often equally as flawed. They don’t consider “outside” options such as ETFs.”
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