Thursday, April 13, 2017

Being smart with $$ -- 82% of actively-managed stock funds do worse than their benchmark


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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