Morningstar Doesn’t Think You Can Figure Out Investing

Indexuniverse.com reports:

“Don Phillips, Morningstar's director of corporate strategy, research and communications, told JoAnne Von Alroth of Investor's Business Daily that ETFs will never replace mutual funds.

He said: "It's natural that over time portfolios become more sophisticated, but I don't think most people have the time to get the diversity exclusively from ETFs that they can get in mutual funds. The traditional open-end mutual fund will continue to be the building block of most people's portfolio."

They must think most folk are stupid and not capable of comprehending the results of this morningstar study reported in an excellent WSJ article entitled “As Returns Sag,Investors Focus On Fees”

“After falling substantially between 2003 and 2006, the expense ratio paid by the average investor in retail mutual funds stayed level last year, at 0.9%, according to a recent study by fund-tracker Morningstar Inc”…..
…other recent developments could mean higher fees for many fund investors in the coming years. For one, investors concerned about the U.S. economy and the dollar are putting more money in foreign funds. These tend to carry higher fees than domestic funds.”

figure a basic investor could either create a portfolio of just 3 etfs from vanguard: total bond mkt index(mgmt fee.11%), total ex us international index(.25%mgmt fee), and total us index(.07% mgmt fee) and create a decently diversified portfolio with mgmt fees. That means just a little bit of effort by an investor could reduce his investment fees by more than 75% and arguably offer more diversification . Or higher an objective advisor(like me) that will steer you the right way with a more sophisticated low cost etf strategy
Of course it couldn’t be that Morningstar, which makes most of its money from selling research on actively managed mtual funds and selling advertising space to managers of actively managed mutual funds (take a look at the glitz add from a fund country that hits you before you even get to the content at morningstar.com) , has a little bit of a bias on this issue…or could it ?