CNBC’s Jim Cramer said he spends most of his time telling investors how to pick their own stocks but stressed that he also has advice about how best to passively manage money in mutual funds.

He recommended investors seek out low-cost index funds if they don’t have capacity to manage their own portfolios.

“At the end of the day, I think a cheap S&P 500 index fund is the least bad way to passively manage your money — better than the vast bulk of actively managed mutual funds,” Cramer said. “But an index fund owns everything, the good, the bad and the ugly, and if you do have the time to do your own homework, I believe you can

beat the performance of an index by picking stocks yourself.”

But Cramer cautioned against most actively managed mutual funds, arguing that investors can’t always trust that money managers will prioritize their clients’ needs. He added that many of these funds have large fees that could eat away at gains.

“My main beef here is with actively managed mutual funds, mutual funds where there are people deciding which securities to buy or sell,” he said. “Unlike hedge funds, mutual fund managers don’t get paid for delivering performance, they collect fees from their investors, people like you, and the amount of money they make depends entirely on the size of their assets under management — which means their biggest incentive is not necessarily to deliver good performance.”

Cramer also warned against exchange-traded funds, or ETFs, arguing that they’re mainly a vehicle for trading. He said while some investors may find success in the gold ETF or ones that mimic the S&P 500, they should tread carefully if they’re not pros or don’t manage individual stocks.

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