I could provide evidence, which you would dismiss because it is historical. For example, I could pick a starting date from the past for a $100,000 investment in any number of investment vehicles and compare it to an index fund. I could pick dates from the 1990's, or else 2004, 2005, 2006, 2008, 2010, 2012, etc., just about any date and show you that my picks beat the index. You would immediately dismiss it as being historical.
Anyone with an IQ above room temperature can pick equity fund winners by looking in the rear view mirror. There will always be winners. The problem is that there is no way to identify them at the beginning, when the investment decision is made.
Over ten years, about 5% +/- of actively managed funds will beat their benchmarks. About half of them (6% per year) will be closed or merged due to poor performance. The remainder will underperform compared to their benchmarks, sometimes dramatically. We have almost two decades of S&P SPIVA data that consistently shows this.
Then you would say that past performance is not predictive of future performance. This is true, of course.
We agree. I'm glad to hear that you understand this. Years of S&P Manager Persistence data support this conclusion. But then why did you advise the OP to look at fund track records?
In essence, you are asking for proof and then you will not accept it as being valid. Nothing that I would show you will convince you. So, what's the point?
Well, data mining history is only proof that you are smart enough to read old data. I've already conceded that there are always winners. That is not actionable information.
Meanwhile, it is an irrefutable fact that investors in an index fund will NEVER beat the market. It is also an irrefutable fact that some people do beat the market.
Absolutely true. We agree. You don't mention, however, that the chances of a managed-fund investor beating the market over five or ten years is in the range of 1 out of 10 to one out of 20. Those are lousy odds.
The stock-pickers, however, desperately work to obfuscate the fact that the odds are lousy by cherry-picking the long time periods, comparing funds to irrelevant benchmarks, ignoring survivorship bias, and crowing about their funds' performance over a few months. No surprise, really. As the investing population begins to understand, the stock-pickers' income has dived, many of them have been laid off, and firms that rely on stock-picking funds are attempting to survive by merging. So the stock-pickers are scared for their livelihoods.
I'm also curious as to your constant pouncing on anyone that dares suggest that a managed fund is a viable alternative to an index fund. Why do you do this?
Well, if "viable" means the investor in a managed fund is still alive at the end of ten years, then I guess that choice is viable. But if "viable" means an investor's probability of winning with managed funds is higher than with an index fund, then the choice is not viable.
I do this because people come here asking for investment information and too much of it is nonsense, like your assertion that managed funds are a good bet. They are not.
There I go, @pb4uski. Don Quixote charges yet again.
)
