David Swenson, head of the $15 billion Yale endowment, has quite an impressive track record – 16% annually over the past 20 years. He won’t divulge his philosophy or holdings, but he doesn’t mind sharing his thoughts on mutual funds.
"Soft money, 12b-1 fees, overtrading, market timing, and other management practices lower performance and virtually guarantee that most mutual fund returns will fall short of their benchmark, such as the S&P 500." Swenson also points out that even though the collective performance of mutual funds is poor (compared to their benchmark’s), it really is quite worse when you take into account all the other poor performing funds that were either closed or merged into sister funds.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.