By Jonathan Chevreau Excerpt from National Post FP Investing Section Tuesday, August 17, 2004

I don't know and I don't care.

This empowering magical phrase is, sadly, not original with me. I've cribbed it from a piece one of America's best financial writers penned three years ago. In a column beloved by passive investors everywhere, Jason Zweig recapped his slow personal evolution from believer in stock-picking and hot active funds to passive indexer.

The "superstar" mutual fund managers he chose in the 1990s "had a disconcerting habit of fading from supernova to black hole," Zweig wrote.

"A few things were beginning to sink through my thick skull," Zweig confessed. "I wasn't very good at fund picking, and beating the market is amazingly hard."

You can Google the original but Zweig concludes with: "Will value stocks do better than growth stocks? I don't know, and I don't care -- my index fund owns both. Will health care stocks be the best bet for the next 20 years? I don't know, and I don't care -- my index fund owns them."

Let's assume you wish to adopt this catchphrase as your personal investment battle cry. By so doing, you'll become an unofficial member of "Active Investors Anonymous." [See the Index Funds Advisors site at www.ifa.com for the 12-step recovery program.]

Implementing this program will be no slam dunk. Odds are you currently use a commission-based financial advisor who believes in active management, or professes to.

This is achieved either through mutual funds or individual stocks the two of you pick jointly in a collaboration of sheer genius. (Evidently, the two of you think you do know and you certainly do care when the picks don't work out.)

Certainly, many investors enjoy picking the odd stock, which is why tolerant advisors may suggest that those who are so inclined allocate 10% of their portfolios for such adventures.

That's the "explore" mandate, but it goes hand in hand with handling your serious money -- your core portfolio -- through passively-managed, low-cost index investments.

One way to build your passive core portfolio is to go to any major Canadian bank and use their no-load index funds. But these are not all as ultra-low-fee as the press over indexing may suggest, so choose carefully. Above certain minimums, CIBC index funds can be reasonable, as are the TD E Funds.

If you value advice and want to use your current stockbroker, you can "go passive" with exchange-traded funds, or ETFs.

If you work with someone licensed only to sell mutual funds, indexing may be more of a problem. These advisors are compensated primarily by selling actively managed mutual funds. The big-name fund companies like AGF, AIM Trimark, C.I., Investors Group and Mackenzie generally don't offer index funds, despite the vast literature showing their value.

The reason they don't can be inferred from a line American novelist Upton Sinclair created decades ago: "It is difficult to get a man to understand something when his salary depends upon his not understanding it."

It's possible to value advice but not active management. You can get it through fee-based advisors like... KCM Wealth Management Inc.

These firms charge fees above and beyond the low MERs embedded in the investments they recommend. These sometimes include actively managed no-load funds or F class mutual funds; but are more likely passively managed index funds or ETFs.

So ask me anything:

• Should I buy the Google IPO?
• What if interest rates soar?
• Where's Nasdaq headed?
• What if terrorists strike?

You'll get the same answer:

• I don't know and I don't care.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.