A 'Dilbert' Guide to Funds

08/02/2010 Share 0 comments

Dogbert, the scheming canine in the "Dilbert" comic strip, launched a fictional Dogbert Mutual Fund back in the 1990s. He hasn't started an exchange-traded fund yet—and "Dilbert" creator Scott Adams doesn't anticipate that he will. For Mr. Adams, the financial manager turned cartoonist who for 21 years has used "Dilbert" to skewer the inanities of corporate life—and occasionally the investing industry—leaving ETFs out of the comic strip is his way of indirectly praising them.

In real life, the 53-year-old Mr. Adams gets the bulk of his stock exposure through two ETFs: SPDR S&P 500, which tracks the Standard & Poor's 500-stock index, and iShares MSCI Emerging Markets Index, which tracks a group of stocks in developing nations. Those ETFs represent about 20% and 5%, respectively, of his personal portfolio. Over time, Mr. Adams may increase each to perhaps one-third of the total, as some of the individual municipal bonds that constitute the bulk of his portfolio mature.

Mr. Adams says that from his perspective as a cartoonist, "there has to be something broken in order to get a joke out of it." In a series of "Dilbert" comic strips that ran in 1997, Mr. Adams—who spent years in corporate America and got an M.B.A. along the way—definitely got some laughs out of actively managed mutual funds.

In one strip, Dogbert tells Dilbert, Mr. Adams's hapless cubicle-dwelling Everyman, that he is starting a mutual fund "for investors who aren't bright enough" to know about alternatives like index funds.

In another strip, Dogbert appears in a TV infomercial, telling viewers that "studies have shown that monkeys can pick stocks better than most professionals." That's why, he explains, the Dogbert Mutual Fund employs only monkeys. "Yes, our fees are high, but I don't apologize for hiring the best."

Mr. Adams says he doesn't consider buying broad index funds and index ETFs to be "investing"—and he means that as a compliment. He doesn't believe ordinary investors or financial pros really have any insight into what is going to work, so he equates investing—or trying to boost returns by making selections based on some intelligence or research or expert advice—with "junk science and astrology," he says.

In contrast, Mr. Adams sees buying market-tracking index funds or ETFs as a smart form of diversification. "It is simply spreading your money around because there is a high likelihood something bad is going to happen to one of those areas and there is at least some likelihood that something good will happen in another," he says.

He has come to use ETFs rather than index funds in the past five years because of their usually lower expense ratios. He says he bought them through discount brokerage Charles Schwab Corp., and he bought his munis with assistance from Schwab's bond specialists.

Almost 10 years ago, the cartoonist did a lot of reading about investing as part of an effort to write a "Dilbert" ebook about personal finance. But he says that when he went to put his thoughts into writing, he was "highly disappointed that they all fit on half of one page."

Mr. Adams eventually included the advice—a list of nine rules that he dubbed "Everything You Need to Know about Personal Investing"—in his 2002 book "Dilbert and the Way of the Weasel." The list starts off with, "Make a will," and includes advice to fully fund a 401(k) and an individual retirement account and to invest retirement savings 70% in a stock index fund and 30% in a bond fund.

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Tags: 401K, investing

Ticker: SPDR S&P 500, iShares MSCI Emerging Markets Index