https://www.investors.com/etfs-and-fund ... s-passive/
I thought the evidence on FAs vs index funds was quite well established.
"Study after study, though, shows why investors in active mutual funds are fed up. Active funds are generally lousy. In the past five years, 79% of large-cap funds lagged the S&P 500, says the S&P Dow Jones Indices SPIVA Scorecard. And their longer-term track record is even uglier. Nearly 88% of large-cap funds trailed the S&P 500 in the past 15 years. [note: probably the % goes up even more if we take 20 years?]
And it's pretty much the same story across asset classes. Nearly 90% of all midcap and small-cap funds lagged their benchmarks.
What about the argument that portfolio managers are skilled at finding undervalued gems? Not true. In fact, their track record there is even worse. Nearly 94% of large-cap value funds lagged the benchmark.
If active fund managers shine anywhere, it's with bonds. But even there, the indexes still win. Nearly 60% of active bond funds lag the benchmark.
Morningstar found that from 2014 to 2023, just one in every four active funds beat its average indexed peer. "
Also in Jan 2024 the AUM of index passive funds is larger than AUM of active funds. so either investors are silly, or it's better to invest in passive index funds.
Do good financial advisers exist? Maybe, but they do not know it, and we do not know it. picking someone who outperformed the market last 5 years is not indicative of future performance. and since the chance that they perform better than the market over 15 years is 12%, I take the market!
I thought the evidence on FAs vs index funds was quite well established.
"Study after study, though, shows why investors in active mutual funds are fed up. Active funds are generally lousy. In the past five years, 79% of large-cap funds lagged the S&P 500, says the S&P Dow Jones Indices SPIVA Scorecard. And their longer-term track record is even uglier. Nearly 88% of large-cap funds trailed the S&P 500 in the past 15 years. [note: probably the % goes up even more if we take 20 years?]
And it's pretty much the same story across asset classes. Nearly 90% of all midcap and small-cap funds lagged their benchmarks.
What about the argument that portfolio managers are skilled at finding undervalued gems? Not true. In fact, their track record there is even worse. Nearly 94% of large-cap value funds lagged the benchmark.
If active fund managers shine anywhere, it's with bonds. But even there, the indexes still win. Nearly 60% of active bond funds lag the benchmark.
Morningstar found that from 2014 to 2023, just one in every four active funds beat its average indexed peer. "
Also in Jan 2024 the AUM of index passive funds is larger than AUM of active funds. so either investors are silly, or it's better to invest in passive index funds.
Do good financial advisers exist? Maybe, but they do not know it, and we do not know it. picking someone who outperformed the market last 5 years is not indicative of future performance. and since the chance that they perform better than the market over 15 years is 12%, I take the market!
Statistics: Posted by jg12345 — Wed Oct 09, 2024 9:41 pm