Stock Pickers Underperform Again

August 10, 2016

 

A recent CNBC post highlighted how poorly active managers of stock funds are doing this year.  They pointed out that active fund managers had their worst first half since the data from Bank of America started tracking their performance in 2003.

 

Money keeps pouring into passively managed stock funds and ETFs (Exchange Traded Funds-like a mutual fund except it is traded during the day and usually follows an index).

 

Through June 2016 only 18 percent of Large Cap US fund managers beat the broad Russell 1000 index benchmark. The table below shows the percentage that beat that index for each year from 2003 to present.

 

 

 

 

Excuses from active managers abound, but the fact is there is a lot of competition.  To outperform their peers and an index after significant costs is too tall a challenge.

 

Returns from Large Cap US stocks can be captured with little cost using an index fund.  Returns from other asset classes that have higher expected returns can be best captured using funds that follow an evidence based approach, as Dimensional Fund Advisors (DFA) uses.

Please reload

Newsletter

Subscribe to our newsletter to stay up to date on investment and wealth management news

Recent Posts
Please reload

Archive
Please reload

Search By Tags
Please reload

You might also enjoy reading:

Is the Stock Market Divorced from Reality?

September 21, 2020

A Presidential Election during a Pandemic-what will that mean for the stock market?

September 21, 2020

The Stock Market Teaches Everyone a Lesson Again

June 16, 2020

1/10
Please reload

Visit

400 S Dixie Hwy Suite 322

Boca Raton, FL 33432

Call

T: 561-391-4477

F: 561-391-8232 

Boca Raton Financial Planner
  • LinkedIn App Icon

Copyright 2020

Investment Advisory Professionals, LLC

 

Disclosure