When to Fire Your Money Manager

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As the financial markets grow in complexity, the average person doesn't stand a chance investing his or her own money. As a result, many hire money managers to do their investing for them. But finding the right person to take care of your nest egg can also be nerve-wracking. This was the subject of a great column in The Atlantic by Jeffrey Goldberg back in 2009, shortly after the stock market bottomed. This week, economic commentator Barry Ritholtz offers his own view of when it's time to fire your fund manger. He provides five criteria, none of which have anything to do with performance. Here's one:

When they become a closet indexer: When a fund owns 100, 150, 200 names, they effectively become a high cost index. Even if they have the top performing stocks, it will be in such small quantities as to not move the needle. This is an easy fix -- you replace them with a low cost, passive index.

Read the full story at Ritholtz's The Big Picture blog.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
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