| Portfolio | Pros | Cons |
|---|---|---|
| Actively managed mutual funds |
- Professional active management - Potential to outperform the market - Diversified well among various securities - Largest number of fund choices |
- Higher ongoing expenses - Possible underperformance - Least transparent - Higher portfolio turnover |
| Index mutual funds |
- Diversified very well among various securities - Generally low ongoing expense - Seeks to match index performance (minus fees and expenses) |
- Limited selection in certain asset classes - No active management - No potential to beat the index |
| All-Index ETF portfolio |
- Diversified very well among various securities - Generally low ongoing expenses - Niche options available if desired - Transparency on a daily basis into the makeup of the fund - Trading flexibility - Seeks to match index performance (minus fees and expenses) |
- No active management - No potential to beat the index |
| Individual stocks and bonds |
- No ongoing management expenses - Maximum control - Complete transparency |
- Higher transaction costs - Diversification can be more difficult - No professional management - Certain types of bonds may have low liquidity (for individual bonds) |