If mutual funds are a cornerstone of your investment strategy, you need to check out Chip and Dan Heath’s most recent Fast Company column.

Citing a study fielded by a team of financial researchers, as well as commentary by David F. Swensen, the highly successful manager of Harvard’s endowment since 1985, the Heath brothers present a compelling case that mutual funds are a bad idea versus index funds.

The study, incidentially, studied returns on hundreds of funds during the period 1979 to 1998, so the 2000-2001 recession wasn’t a factor in the results. Funds underperformed the Vanguard 500 Index Fund by an average of 2.8% per year during this period; from 1984 to 1998, the deficit was over 5%!!

You can find the Heaths’ column here.

By the way, if you haven’t read the Heaths’ Made to Stick, you need to. It’s a fantastic read for anyone who presents ideas to others…  and doesn’t that describe all of us?

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