Avoid Being Conned By Mutual Fund Advertising

All performance-based advertising should be banned.

Your telephone rings. The call is from an executive recruiter. She has some really good news. You are being offered a position as the fund manager for a large-cap mutual fund. Large-cap stocks are those of companies with a market capitalization value of more than $10 billion. The companies in this group are some of the largest in America and include names such as Microsoft and General Electric.

The benchmark index against which the performance of large-cap fund managers is measured is the Standard & Poor’s 500 index. This index includes the stock of 500 leading companies in the U.S.

Unfortunately, there’s a catch to this exciting job offer. You will not receive any compensation if your returns do not exceed the returns of the benchmark index. On the flip side, if you beat the index in any calendar year, you will receive minimum compensation of $1 million.

Read the rest of the article at US News.