12 9 / 2012

"The vast majority of investor money in collective vehicles still resides in open-end mutual funds. In the end, it is much easier to blame some high-paid portfolio manager in Boston or New York for your financial misdeeds than to take personal responsibility for them."

This is very insightful, I think. If you put your money into a mutual fund, two things can happen. Either it does great, in which you can pat yourself on the back for being clever. Or it doesn’t do so great, in which case you can blame someone else for the underperformance. Both are psychologically much more comfortable places to be than taking responsibility for your own investment decisions, even if they’re just passive investments.

Active management and personal responsibility | Abnormal Returns

Permalink 3 notes

  1. dmandl said: True, but in cases where the fund manager does something blatantly crazy, illegal, etc., it’s not unreasonable to hold him/her accountable. Example: funds that invested in dot-coms even though their mandate was medical companies or whatever.
  2. felixsalmon posted this