McMurtry Investment Report and Model Portfolios™

Picking your own stocks vs. using an ETF or mutual fund – Which is a better choice?

Many advisers encourage the use of mutual and exchange traded funds over individual stock picking. In fact many actually discourage investors from buying stocks on their own.

There are many flaws to their argument as follows:

When the equity markets go down in a recession there is nowhere to hide if invested in a fund or ETF.

Owning individual stocks enables the investor to better control their overall portfolio volatility or risk. Proactively managing your investments through stock selection, asset mix and equity sector allocation can materially lower your level of risk. In the early stages of a recession this can mean increasing your weight in cash and reducing your exposure to more volatile equity sectors and higher beta stocks.


For many investors risk reduction is equally as important as absolute investment returns.

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