Charts confirm how hard it is to pick your 401(k) mutual funds

If you watch company 401(k) retirement plan default menus for individual investor clients every day like I do, the conclusions in the article linked below come as no surprise.

I remind my individual company 401(k) advice clients of this fact all the time. That is, I can help them clearly identify “what to buy” on their company 401(k) retirement plan menu. This article serves as a good reminder to them.

These 2 charts will give stock pickers everywhere nightmares

JPMorgan Equity Strategy released a note last week that shows 68% of active mutual funds underperformed relative to benchmark returns in 2016. Even professional investors struggled with their picks last year.

In English, that means that individual company 401(k) retirement plan participants have only have a 32% chance of guessing at the best mutual funds to own. You would not rush out to your local casino with those same odds.

The article also states this mutual fund benchmark underperformance as the reason for so much money flowing out of actively managed mutual funds into index mutual funds.

Index mutual funds are some of the best mutual funds to be invested in now on many of the company 401(k) retirement plan menus that I watch for clients.

High fees and bad investment performance are not a good combination. There is a good chance that you might suffer from both investment management problems in your managed 401(k) mutual funds right now.

Ric Lager
Lager & Company, Inc.