82% of actively-managed stock funds did WORSE than their
index benchmarks over the last 15 years, reports the Wall Street Journal today
referencing the SPIVA scorecard. That
means you had a far better chance of maximizing your portfolio by leaving your
money in unmanaged index funds than in funds where someone gets paid well to
choose which stocks to own and which ones not to own. How is this possible? The fees extracted by the fund managers leave
them at a big disadvantage vs. index funds that charge miniscule fees by
comparison. The moral? Chasing
performance may leave you with underperformance more often than not.
Larry Pike, CFA
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