ETF Store Show Recap – 9/10/11

Listen to The ETF Store Show every Saturday at 3pm on KCMO Talk Radio 710AM as we cover everything you need to know about Exchange Traded Funds and the world of investing. Think your advisor is Nostradamus and can pick the stocks or actively managed mutual funds that outperform the broader market in any given year?  You may want to reconsider that.  On our most recent radio broadcast, we answered this and several other common, day-to-day questions we receive from individuals regarding Exchange Traded Funds and The ETF Store. A common refrain we hear from individuals is that their advisor has told them they’re accepting mediocre returns by investing in ETFs since ETFs are passively managed, indexed investments.  These same advisors believe trying to pick individual stocks and actively managed mutual funds is a better path to financial success for their clients.  Consider the following: Dalbar, a mutual fund research firm, found that over the 20-year period ending December 31, 2010, the average mutual fund investor achieved an annual return of 3.8% compared to 9.1% for the S&P 500 index! Researchers at Dimensional Fund Advisors found that from 1980 to 2008, 25% of stocks were responsible for all of the gains in the broad market.  75% of the stocks over this time generated annual losses of 2%! On our radio show, we delved into these and several other mind blowing stats regarding actively managed mutual funds and individual stock selection and explained why your advisor may want to consider starting a hedge fund if they think they can consistently find outperformance via these investment vehicles. We also covered a wide range of topics including explaining the importance of independent custodians, whether it is expensive working with an investment advisor, some high dividend yielding ETFs to consider, how tactical asset allocation reduces risk, and everyone’s favorite subject these days – gold. Listen to the full show here.