John Rekenthaler, Vice President of Research for Morningstar, has written a column about "Simplicity." These are important quotes:
For Mutual Funds, Simpler Seems Better"Because hedge funds are not required to report their returns to a central authority, they self-report. That is, they give their results to databases when and if it suits them. That naturally leads to both creation and survivorship biases, with hedge funds surfacing when the numbers support them, and then disappearing when they do not."
"The general rule of mutual fund pricing is, the fancier the label, the more that investors pay."
"I must issue the usual caveat for mutual fund research that consumes massive amounts of data, and returns summary statistics—the dangers are great!"
"Complex strategies tend to harm rather than help mutual fund performances certainly matches the eye test."
"Mutual fund managers who invest in flavors other than plain-vanilla have some proving to do. The odds do not look to be in their favor."
"The lesson that mutual fund industry leader Vanguard has long taught its shareholders: Keep it simple, and keep it cheap."