Putting purpose before product

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.

Putting purpose before product

Postby Rick Ferri » Thu May 02, 2013 10:49 am

What funds should you buy? Should it be index funds or exchange-traded funds, or low-cost actively managed funds, or should you pay an adviser for access to special products like DFA funds? This is an important question — but it’s often the wrong question. The products used to construct a portfolio are a function of a portfolio’s purpose. Get the purpose right first and then select the product.

When Fund Selection is Done Right

Rick Ferri
Mutual fund investing is simple. There is risk, there is return, and there are costs. All else is marketing.
User avatar
Rick Ferri
 
Posts: 7790
Joined: Mon Feb 26, 2007 12:40 pm
Location: Home on the range in Medina, Texas

Re: Putting purpose before product

Postby EternalOptimist » Thu May 02, 2013 3:35 pm

Good one Rick...begin with the end in mind.
"When nothing goes right....go left"
User avatar
EternalOptimist
 
Posts: 823
Joined: Wed Nov 07, 2012 1:21 pm
Location: New York

Re: Putting purpose before product

Postby Rick Ferri » Thu May 02, 2013 9:53 pm

Just trying make sure we don't put the cart before the horse. :wink:

Rick Ferri
Mutual fund investing is simple. There is risk, there is return, and there are costs. All else is marketing.
User avatar
Rick Ferri
 
Posts: 7790
Joined: Mon Feb 26, 2007 12:40 pm
Location: Home on the range in Medina, Texas

Re: Putting purpose before product

Postby hq38sq43 » Thu May 02, 2013 10:01 pm

"Perhaps the commonest stupidity is forgetting what one is trying to do."

Friedrich Nietzsche
Harry at Bradenton
hq38sq43
 
Posts: 340
Joined: Tue Sep 06, 2011 6:25 pm
Location: Bradenton FL

Re: Putting purpose before product

Postby bertilak » Fri May 03, 2013 8:59 am

"A solution in search of a problem" -- a pejorative aphorism common in various technical industries.
No-one really listens to anyone else, and if you try it sometime you will see why. | -- Mignon McLaughlin
User avatar
bertilak
 
Posts: 3243
Joined: Tue Aug 02, 2011 6:23 pm
Location: East of the Pecos, West of the Mississippi

Re: Putting purpose before product

Postby baw703916 » Fri May 03, 2013 9:13 am

Rick,

You mention in the column that "there are some [asset classes] that work better in an actively-managed fund." Which ones are those?

Thanks,
Brad
Most of my posts assume no behavioral errors.
User avatar
baw703916
 
Posts: 5667
Joined: Sun Apr 01, 2007 2:10 pm
Location: Northern Virginia

Re: Putting purpose before product

Postby Rick Ferri » Fri May 03, 2013 9:16 am

Municipal bonds, high yield bonds, emerging market debt.

My active management I'm referring to a broadly diversified, low-fee fund that is not cap weighted.

Rick Ferri
Mutual fund investing is simple. There is risk, there is return, and there are costs. All else is marketing.
User avatar
Rick Ferri
 
Posts: 7790
Joined: Mon Feb 26, 2007 12:40 pm
Location: Home on the range in Medina, Texas


Return to Investing - Theory, News & General

Who is online

Users browsing this forum: ahimsa, Baidu [Spider], Flexo52, JohnnyB, Naismith, rkhusky, Rodc, Sents, sk0007us and 52 guests