Ken Fisher on the Benefits of Individual Stocks vs Mutual Funds and ETFs

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher believes owning individual stocks instead of comingled products—like mutual funds and exchange-traded-funds (ETFs)—can have important advantages under the right circumstances. Mutual funds and ETFs are tools which can help investors with relatively smaller portfolios achieve proper diversification. But, if you’ve accumulated a large enough portfolio, you can create your own diversified strategy using individual stocks.

Ken says you should consider individual stocks because they are typically more tax efficient and cheaper than owning funds or ETFs. Instead of paying ongoing yearly fund fees, you pay one, generally low, commission for direct stock ownership of a company. Investors may also choose a fund based on the fund manager’s expertise, thinking they will outperform the market. Ken warns that only a small number of mutual funds actually outperform the market.

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Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice.

[ericknaus]

Ken reminds me of my dad’s best friend who would always give sound advice and easy to listen to

[qwertz]

Thank you very much Ken: always a blessing: God bless you.

[macoeur]

I buy inexpensive ETFs (under .07%) Whether It would be less expensive to buy individual stocks, I have to admit, I haven't looked into, but honestly, even if it is, I don't want to work that hard! I get a LOT of diversification buying mostly ETFs and if I tried to match that diversification by buying the individual stocks directly I'd be driving myself nuts trying to keep everything straight. And wouldn't I have a trading fee for each and every stock I had to buy individually in order to match the diversity of my current ETFs? (probably hundreds of different stocks)? That sounds like it would be more expensive. Not less expensive.

I may be confused, but either way, I still don't want to work that hard. :) ...However, I can imagine other scenarios for other people in which it might make more sense.

[exgamer]

What amount of money is considered enough to justify owning individual stocks?

[justinssebanenya]

What is the ceiling or cutoff of what you consider to be "little money"? I know that many call it "it depends ". Perhaps you would help with more specificity. Thank you.

[fancher]

Ken, that bruise under your left index finger in this video certainly looks like it came with a few choice words!

[jin]

Thank you for your dedication and wisdom.
Always looking good.

[AshishKumar-ztro]

Hello sir,
It'd be great if you can explain the implications of diversifications vs concentration.
Thanks

[asphaltandtacos]

For me you have more control over dividends when you own individual stocks. When you own an ETF or mutual fund you have no control of what is in your portfolio when it comes to stocks.

[gmo]

Index mutual funds have fairly low fees. Managed funds ...not so much. Costs create drag and kill the power of compounding. Find a good spot...with diversification and low costs and steady investment in. GL. *And follow Ken.

[sebholding]

Why are stocks taxe efficient and not mutual funds ?

[rexmundi]

All-World index is probably the best long term bet.

[williamc]

This is just an active manager promoting active investing.

[thammymiller]

Guy is not talking perormance though. 99% of hedge funds didn't outperform nasdaq and s&p throughout the last years

[easterntechartists]

i argue the opposite. If you have lots of money, you want to protect it or delegate it. If you have no money, you want individual stocks to try to make something as you got nothing to lose.

[bobplezia]

Buffalo Bob: New big player now:
Amzn is rumored to be considering using cryptocurrencies for their customer's purchases.
Two major "weaknesses" Mr. Fisher uses on these new "currencies' and with Bite coins is there is no value on the coin, like a $10 dollar Bill.
And the other argument is the issue of daily if not but also sever volatility of the value.
I might assume if AMZN solves the value issue, it will solve the volatility issue also.