In this episode, Mark answers, “Why am i paying high management fees when I am seeing bigger returns from a fund”? Don't compare apples to oranges - your tolerance for risk is extremely important to establish. Performance expectations and a time horizon play a role. Most investors have expectations on what their returns should be on their portfolio. Indexes were not always created for people to invest in, they were created to keep investors in the loop for how the economy is doing. Logic would say “i might as well compare my one portfolio to my other portfolio” because there is no clarity in what is owned. Measuring how much risk is produced in getting a return. “Risk adjusted returns refines an investments return by measuring how much risk is involved in producing that return”. You can not chase the returns.

October 25, 2017