Beating the S&P 500
Posted by HanaDaddy | Posted in Investment Tips and Ideas | Posted on 07/31/2009
Tags: investments, market timing, stock market timing, timing the stock market
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About 75% of fund managers do not beat the S & P 500 and year to year. How can a basket of 500 hundred stocks beat most mutual funds actively managed? The people who run these funds are for the most part, brilliant people. They are highly educated and have access to information and advanced decision support systems throughout the world. Why, then, that they do not exceed the S & P 500?
A Quick Test:
Here is a very rough test of performance management: Let’s compare net domestic mutual fund performance provided by Morningstar against the S & P 500 index for one, three, five and ten years, looking back on 30 April 1995. The S & P 500 Index is a fair comparison for large, national companies.
Our results:
- Of the 1097 funds Morningstar covered for a period of one year, 110 beat the S & P 500, while 987 fell short. Results ranged from 46.84% to -32.26% while the S & P 500 reached a 17.44% return.