The current Forbes is cited by economist Tyler Cowan at Marginal Evolution as he makes an entertaining argument blaming mutual fund investors for their performance problems, as opposed to blaming fund trading scandals. In particular, he pulls the following factoids:
How much investors lost, over the last ten years:
Does this mean, as Alex argues, that mutual fund investors are their own worst enemy? Well, sort of. Certainly it is well understood in financial circles that investors trade too often, stick with misperforming funds longer than they should, and generally chase last year’s winners and ignore reversion to the mean. But it is slippery logic to create an equivalency between that behavior, over which investors have control, with other costs over which they have no control and incur without informed consent (e.g., crooked trades, etc.). Granted, the former costs are much larger than the latter, but that hardly absolves “crooked traders” of criminality.