Seriously, a Money Manager Wrote This to Me!

I am on the board of a non-profit in Milwaukee that is in great financial shape with a lot of cash that can be invested, and we regularly get financial performance updates from the professional money managers we’ve hired who oversee some of our investments. These managers are with a well known, national brokerage firm.  Here is what they wrote in their most recent letter:

“It is difficult to find active managers who can consistently outperform their respective benchmark over time, net of fees.”

Huh?  Really?

The benchmarks are easy to understand:  the Russell 2000, S & P 500, comparatives like that.  And this firm want us to pay them a fee so we can underperform the benchmarks?

No wonder why ETF’s and index funds have taken such huge market share.