An interesting article by Daniel Solin, one of my favorite writers.
Enjoy and learn!, Steve ====================
On January 11, 2013, Yahoo’s Daily Ticker did an interview with Amanda Steinberg, founder and CEO of Daily Worth. The piece was entitled: Why You Need to Know More Than Your Financial Advisor. While some of the advice was helpful, most of it was just wrong.
Steinberg correctly urges investors to understand the fees they are being charged. In addition to advisory fees, she states that “certain” ETFs and mutual funds “might” have additional fees. The reality is that almost all ETFs and mutual funds charge a management fee called an “expense ratio”. What’s important to remember is that the expense ratios of ETFs and index funds are significantly lower than those charged by actively managed funds (where the fund manager attempts to beat a designated benchmark). Steinberg should be cautioning her readers and viewers against buying actively managed funds and directing them to the research indicating that expense ratios are the best predictor of performance of mutual funds.