Investment advisors provide value to their clients by identifying mutual funds that are doing well on an absolute basis relative to their index or on a risk-adjusted basis. These advisors have the tools and the dialogue with mutual fund managers. They get to know the decision makers in charge of the mutual fund, the analysts, their expenses and how they do business. Once you have the specialty nailed down, you’re better positioned than the average investor.

One of the most popularly sited benefits of an index fund is their low expense ratio. However, one of the downsides is that they are joined at the hip to an index fund, which can raise your transaction cost. Our financial advisory team recommends a healthy balance of index and actively managed funds. Putting clients into some index funds and some actively managed funds allows them to get the best of both worlds. For someone putting all their “eggs” into exclusively managed funds, we would advise against that.

Want more information? Access the article where Anthony Diaz, CFA and vice president of investments, provides insight on index funds and actively managed funds. Also, feel free to contact our financial advisory team, we’re here to help!