Stock index funds are performing superbly as the bull charges ahead. But don’t look for them to protect you when the market stumbles.
By Steven Goldberg, August 21, 2014
Among mutual fund analysts, John Rekenthaler is one of the best. A Morningstar veteran, he writes a regular, must-read column. So I was surprised to read the first sentences of a recent piece: “Do active funds have a future? To cut to the chase: Apparently not much.”
Rekenthaler is as dead serious as, in my view, he is dead wrong. Look at his case: Over the 12-month period that ended June 30, 68% of new fund investments have gone into index mutual funds, index exchange-traded funds and other passive strategies (passive means a human is not picking the stocks and bonds). A mere 32% of fresh cash went into actively managed funds — those run by well-paid managers who decide what to buy and sell.
