This Week: A Roundup of Essential Articles on Mutual Funds and ETFs

This week’s AAII Weekly Digest highlights these "must-read" AAII articles:

An Inside Look at Exchange-Traded Funds

Exchange-traded funds (ETFs) have been one of the most successful financial innovations in recent years. Since the introduction of ETFs in the early 1990s, demand for these funds has grown markedly in the U.S., as both institutional and individual investors have increasingly found their features appealing. Like mutual funds, ETFs are a way for investors to participate in the stock, bond and commodity markets; achieve a diversified portfolio; and gain access to a broad array of investment strategies.

The Top Mutual Funds Often Don’t Continue to Outperform

Starting in April 2005, we’ve highlighted the mutual funds with the highest five-year returns. We’ve since continued to highlight such funds, with performance tracked over bull markets and bear markets. This year, we look back at what happened to those funds after we highlighted them.

The Index Fund Approach: Tracking the Market

An interview with Vanguard founder John “Jack” Bogle that originally appeared in the January 1987 AAII Journal, at a time when the index fund concept was in its infancy. Bogle discussed the index fund concept.

Fund Investors’ Biggest Mistakes and How You Can Avoid Them

To become the best possible investor you can, it is imperative to avoid the big mistakes. But mutual fund investors are not insulated against these mistakes. Thus, it should come as no surprise that behavioral finance research makes a strong case for buying and holding low-cost, broadly diversified index funds.

Our Member Question for this week is:

When talking with friends, would you rather share how much you weigh or how much money you have saved?

 

 

Vote to answer this week’s Special Question: Which one investment text has had the biggest impact on your investment philosophy and why?

Last Week’s Results:

How important is a mutual fund’s turnover rate when deciding whether to invest in it?

Somewhat important: 43%

Very important: 28%

I do not invest in mutual funds: 17%

Not important at all: 11%

Poll results are as of 9 a.m. (Central) on Monday. 1,473 respondents.

AAII Survey: Why Retail Investors Sell Mutual Funds

There are several statistics that investors evaluate when selecting a mutual fund. Mutual fund turnover typically measures the replacement of holdings in a mutual fund and is commonly presented to investors as a percentage over a one-year period. Turnover generates commissions and other trading costs that lower the fund’s return. The latest reader question asked how important a fund’s turnover is when deciding whether to buy it. The latest special question asked our readers the primary reason why they sell a mutual fund.

Guide to Top Mutual Funds 2019

AAII’s annual guide to the top mutual funds offers total-return performance of common index benchmarks; average performance and risk of common fund categories; the performance of the 50 most widely held mutual funds; and the best- and worst-performing funds of 2018. In all, the guide covers approximately 1,600 mutual funds.