I’m catching on some personal finance magazine reading and find myself again rolling my eyes at their respective “Best Mutual Funds” lists. I’ve had subscriptions to all the major magazine for about 5 years now. Here’s how I translate them through my jaded eyes:
Best Mutual Funds of 2011
Here are our picks for the best mutual funds. We don’t chase performance like those other guys. We put tons of hours into finding the best mutual funds with good management skill and experience and other things that sound good in theory. Oh, and they have to have really good performance over the last several years. But again, no performance chasing here. Nuh-uh.
Where were we? Oh yeah, so to start we had to drop some funds from our list this year, due to their recent drop in performance. I’ll also add some other tangential reasons to hide this fact a bit. We really don’t know how that happened, sorry about that. It was completely unforeseeable.
Oh, but not to worry, we replaced them with other excellent funds that did some really smart things during the last crisis/boom/cycle. Now, if we could just have told you before they did awesome, instead of recommending those crappy funds we dropped in the last paragraph…
Finally, we decided to add more low-cost index funds to our list. For some reason, they keep performing well over long periods of time and are gaining customers as a result. The Vanguard Group recently became the largest mutual fund company in the world by assets, surpassing even Fidelity with their 401k monopoly and their famous Magellan and Contrafund-style active funds. Shh… here’s the secret that nobody else knows: low costs are important.
– Love, your favorite personal finance magazine.
Any magazine with a Top Stocks or Top Funds list should always have to include the same list from 10 years ago. So with the Top Funds of 2010 you’d have to see the Top Funds of 2000. That would be interesting.
I just realized I was similarly disillusioned a few years ago and wrote Anatomy of a Personal Finance Magazine Article.