Again Low Fee Index Funds Beat Active Managed

[38Chevy454]

Saw this morning, and thought I would post here. Excerpt cut from the article:


"According to S&P Dow Jones Indices Risk-Adjusted SPIVA Scorecard: Year-End 2020, after adjusting for volatility, the majority of actively managed domestic funds across market-cap segments underperformed their benchmarks on a net-of-fees basis over mid- and long-term investment horizons."


Link to article below. Not anything folks here will learn from, pretty much a fluff piece buit does have list of example low cost index funds. Just has the confirmation of low fee index funds beat higher fee active managed funds over the mid and long term timing.


https://finance.yahoo.com/news/guide...184923526.html

[tdv2]

Quote:

Originally Posted by 38Chevy454 Saw this morning, and thought I would post here. Excerpt cut from the article: "According to S&P Dow Jones Indices Risk-Adjusted SPIVA Scorecard: Year-End 2020, after adjusting for volatility, the majority of actively managed domestic funds across market-cap segments underperformed their benchmarks on a net-of-fees basis over mid- and long-term investment horizons." Link to article below. Not anything folks here will learn from, pretty much a fluff piece buit does have list of example low cost index funds. Just has the confirmation of low fee index funds beat higher fee active managed funds over the mid and long term timing. https://finance.yahoo.com/news/guide...184923526.html

No surprises....the evidence has been there all along....it's a zero sum game. In aggregate active funds must underperfom the market by the fees and expenses they incur. It's just simple math. I really don't understand why many refuse to accept this.

[VanWinkle]

Index funds make investing simple- 2-3 index funds in the allocation that works for you. You can get on with life, not spend all your time researching investments with a slim chance of beating the index. If you like trying to beat the odds, congrats to you and good luck. I'd rather be at the golf course and traveling to my kids in Colorado and Washington state.

VW

[Montecfo]

Well, that does it!

I am not going to invest in "the aggregate" of actively managed funds!

[OldShooter]

Quote:

Originally Posted by Montecfo ... I am not going to invest in "the aggregate" of actively managed funds!

Exactly! That is the logical takeaway from the SPIVA reports. The next sentence, also logically, is to say "I am going to invest with the above-average managers."

How to find those above-average managers? The most popular technique is to chase performance. That is foundation of the industry's advertising. For those who favor that approach, S&P has a report for you, too: The "Manager Persistence" report, also published every six months. Sadly, they are all the same: For any period, the top managers' results for the following period are at hardly better than random and more typically worse than random. The mantra is always proven true: Past performance does not predict future results.

That's the dead end; no one knows how to predict which managers will be above average in the future. Here's Nobel winner Eugene Fama's long time research partner Ken French with a short video discussion: https://famafrench.dimensional.com/v...-managers.aspx

Links:
S&P SPIVA gateway: https://www.spglobal.com/spdji/en/spiva/#/
S&P Manager Persistence gateway: https://www.spglobal.com/spdji/en/in...nce-scorecard/

[Markola]

There’s the benchmark average returns and there’s the (terrible) average returns of all mutual funds. I’ll take the average benchmark returns any day.