View Single Post
  #27  
Old 07-10-2005, 06:06 PM
gvibes gvibes is offline
Junior Member
 
Join Date: Aug 2003
Posts: 0
Default Re: Why Mutual Funds are better than Index Funds

disclaimer - I didn't read the posts in detail - some things may already have been said.

First, Berkshire Hathaway isn't a mutual fund - I don't know why it is being discussed.

Second, concerning the following statement:
[ QUOTE ]
... Would you put them into an index fund or a proven mutual fund? I would put them into a good value mutual fund because I think they would freak out if they saw the volatility in the index...

[/ QUOTE ]

This is incorrect. Have you heard of "beta"? For instance, Legg Mason Value Trust (as far as I know, the only fund to beat the S&P 500 for each of the last 15 years), has a beta of 1.36. So, the best fund out there is appreciably more volatile than the S&P 500.

So, anecdotally, there doesn't seem to be a whole lot correlation between volatility and returns.

EDIT: actually, if you want to the lowest beta, stick with stocks!!! For instance, brk-a has a beta of ~.14
Reply With Quote