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How mutual funds make tons of money for themselves, not you

Just because mutual funds are popular doesn't mean they're the right choice for everyone. Are mutual funds making their investors money? Check it out.

Ramit Sethi

Just because mutual funds are popular doesn’t mean they’re the right choice for everyone. In fact, there’s a lot of trickery surrounding the entire industry.

From yesterday’s New York Times:

But when the bubble burst, the Janus family of growth funds was absolutely crushed. From September 2000 to September 2002, the flagship Janus Fund lost almost 60 percent of its value, as did Janus Worldwide, another big-name fund…Here’s the part I find most amazing. Despite everything Janus did wrong, despite losing hundreds of millions of dollars that individual investors had entrusted to them, not once during this entire time did Janus post an annual loss.

Quiz: What is your earning potential? Choose the answer you agree with the most
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Are they making their investors money?

In the case of too many Janus funds, and this is true of most growth funds these days, the answer this year is no….Over all, Janus’ funds are down 5.2 percent this year, slightly better than their peers, but significantly worse than the Standard & Poor’s 500.

I excerpted a lot. The entire article is even better: Janus Funds: Everybody Loves a Loser

What is a mutual fund and how do mutual funds work? I’ve written all about mutual funds here. Check it out.

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