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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (96387)	6/27/2002 5:18:19 PM
From: Dave Feldman	Read Replies (1) \| Respond to of 132070

I'm afraid that this indexing discussion isn't too helpful because of apples/oranges problems. We've got so many different products/indices we're discussing: Returns from: individual stocks actively managed mutual funds index funds based on indices constructed by humans index funds based on mathematically modeled indices (e.g., Vanguard's Total Market Index Fund) Indices meant to reflect parts of the market (e.g., S&P 50, all of the Russells) Indices meant to reflect the market (e.g., Wilshire 5000) When you mix in other expenses (mutual fund fees, stock commissions, "forced" capital gains/losses in mutual funds, "forced" distributions of dividends, etc. it gets awfully complicated. I'm not sure going back and looking, in retrospect, at old funds does much good either. Old funds, as well as new ones, disappear, and those tend not to be the successful ones <g>, so the old-timers tend to be decent performers. The makeup of the indices themselves affects the performance of the index funds and individual stocks (thus the VASO comments here). It's tough. I've done pretty well by sticking with some mutual funds that mimic my own philosophy of value investing. But I went through a bad stretch during the NASquacky years when I was underperforming woefully in this part of my portfolio. It was important to me that these funds stuck by their guns, and two of the fund families, Wasatch and Mutual Series, did completely. Oakmark eased out a couple of folks, but I couldn't find any difference in the actual philosophy of the funds. All three, especially Wasatch, have done marvelously of late. But I do agree with BGR in one respect. If I had a choice of investing in Vanguard's Total Stock Market or a randomly selected actively-managed Fidelity or Vanguard fund, I'd take the index fund. For those who are not savvy about markets, or have no interest, I think there are worse things to put in their 401K then a low-fee broad index fund, even though it guarantees they won't beat "the market."