Ordinary Americans have more than $12 trillion invested in them. Around 60 million households (more than half the country) have them in their portfolios. They are extremely prevalent in retirement accounts and 401k plans. Mutual funds have been a great success! They have become the most popular way for the average investor to put money into stocks.
There is no doubt that mutual funds have many advantages. Being a highly diversified and relatively low risk option, they appeal to amateur investors who would rather trust their money to professionals than to their own whims. Mutual funds advice is everywhere on the net and it is easy to acquire reliable information on each one of them.
Don’t be fooled though, mutual funds are not the panacea of easy investing. They have come under criticism for their high expense fees and, in some cases, below-par performances. The best mutual funds advice explains not only the benefits and drawbacks of these options, but offers alternatives as well. That is what this article aims to do.
Recently, a new investment solution has started to gain popularity. Separately managed accounts have really taken off these last few years, and no less than $2 trillion has been invested into them in the US. By the end of 2011, this figure was expected to rise to $3.4 trillion.
More firms can now offer such accounts, as increased operational efficiencies have made this possible. As a result, investment minimums and expenses have gone down, allowing the reasonably wealthy access to the benefits and the managers that in the past were reserved for the super wealthy.
Mutual funds and managed accounts are very similar. The key distinction is that in a mutual fund you own shares which are polled with other investors, and with a managed account you own the portfolio of the stocks or bonds.
Greater control of the capital gain tax burden is handled with managed accounts. With mutual funds, you cannot control the fund manager's actions and you may suffer from unnecessary tax gains. If you own the holdings, then you can make use of losses in particular shares or bonds to offset some of these gains.
Mutual funds and managed accounts are very similar. The key distinction is that in a mutual fund you own shares which are polled with other investors, and with a managed account you own the portfolio of the stocks or bonds.
Greater control of the capital gain tax burden is handled with managed accounts. With mutual funds, you cannot control the fund manager's actions and you may suffer from unnecessary tax gains. If you own the holdings, then you can make use of losses in particular shares or bonds to offset some of these gains.
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