Vern Sumnicht, MBA, CFP®
Chief Executive Officer
Sumnicht & Associates, LLC |
“In the February 1, 2009 issue of Economics & Portfolio Strategy Newsletter, Mark Kritzman reports the findings of his study showing that, after fees, the vast majority of actively managed mutual funds (and even hedge funds) fail to outperform benchmark indexes. The costs involved in implementing many of those strategies are simply so high that the managers of those funds cannot provide enough outperformance to overcome them and deliver superior returns. Management fees, marketing fees such as 12b-1, commission and transaction costs, incentive fees, and tax considerations significantly reduce investor returns to the point where an investor is almost always better off investing in an index-based investment rather than a managed strategy.
This information is not surprising. As an investment advisor for over 25 years, I’ve learned firsthand that the costs of active management more often than not are a leading impediment to investing success. I founded iSectors for this very reason – to help improve my clients’ returns by reducing their costs of investing.
At iSectors, we primarily utilize low-cost, indexed exchange-traded funds (ETFs) in our portfolio allocations. We maintain low management and platform fees. Infrequent rebalancing in most of our models, along with the utilization of ETFs, lowers tax costs. In uncertain market environments, there are many things that you, as an investor, cannot control. Costs do not have to be one of them. I’ve written a number of special reports that explain these concepts in more detail. I invite you to read them, look through the portfolio solutions we present to you here, and find out how iSectors can help you improve your investment results."
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