Dump Mutual Funds

Dump Actively Managed Mutual Funds

On occasion I am asked if it is best to sell actively managed mutual funds and buy index ETFs, or is it better to make the switch gradually.  The answer is an easy one and it is – dump immediately.  In fact, with this high market now is an excellent time to cash out of actively managed mutual funds and move into index funds, particularly in tax deferred accounts.

If you are managing your own accounts, something we highly recommend, be sure to have an asset allocation plan in place.  We call this a Strategic Asset Allocation (SAA) plan.  If you don't know what a SAA is, just ask and I will go into it in more detail.

If you will do a search for Dashboard on this blog you will find many examples of asset allocation plans for a wide variety of portfolios.  Take advantage of the examples available here at ITA Wealth Management.  It would not be a surprise if baby boomer and retired investors did not find a number of the SAA to be too aggressive.  That is easily rectified.  Remember that there is no perfect SAA and one SAA does not fit all investors.  One thing I do recommend and that is to diversify as widely over the world as is possible.

Don't delay longer but sell off those actively managed mutual funds and move the cash into index ETFs.

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