Investing in Mutual Funds Made Simple

Mutual fund investors must be bewildered by their thousands of choices, we observed recently.

Not necessarily. Mere handfuls of funds attract much of the money. "Passive" investors – that is, indexers – have an especially narrow focus. Eighty-five percent of the dollars in S&P 500 index funds reside in just five funds.

What's more, Jonathan Clements reports in the WSJ, investors in S&P 500 index funds appear to strengthen their advantage by exercising patience. As shown at right, they enjoy superior dollar-weighted  returns, presumably because they better resist the impulse to buy high, sell low.

Will robo-advisers extend the advantage of patient investing to a wider range of wealth builders?