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Nice article on being average:
"No longer can actively managed funds just offer a diversified portfolio of securities — they need to outperform index funds to compensate investors for their higher costs. Most fund managers believe that they're up to the challenge, but an honest observer must conclude that most have failed to do so.
The latest evidence comes from the year-end 2015 Standard & Poor's Indices Versus Active Fund (SPIVA) Scorecard; the de facto scorekeeper of the active vs. passive debate. For the 10 years ending Dec. 31, 2015, 82% of large-cap, 88% of mid-cap and 88% of small-cap actively managed domestic stock funds underperformed their S&P benchmark index. The majority of active managers in all international stock-asset classes also underperformed their S&P benchmarks in the past decade.
Morningstar sought to determine how many domestic stock funds outperformed, on an after-tax basis, a comparable Vanguard index fund for the 10 years ending Oct. 31, 2015. Of the 4,993 funds studied, only 205 (just 4.1%) outperformed their Vanguard competitor. Bogle's Folly, indeed."
"No longer can actively managed funds just offer a diversified portfolio of securities — they need to outperform index funds to compensate investors for their higher costs. Most fund managers believe that they're up to the challenge, but an honest observer must conclude that most have failed to do so.
The latest evidence comes from the year-end 2015 Standard & Poor's Indices Versus Active Fund (SPIVA) Scorecard; the de facto scorekeeper of the active vs. passive debate. For the 10 years ending Dec. 31, 2015, 82% of large-cap, 88% of mid-cap and 88% of small-cap actively managed domestic stock funds underperformed their S&P benchmark index. The majority of active managers in all international stock-asset classes also underperformed their S&P benchmarks in the past decade.
Morningstar sought to determine how many domestic stock funds outperformed, on an after-tax basis, a comparable Vanguard index fund for the 10 years ending Oct. 31, 2015. Of the 4,993 funds studied, only 205 (just 4.1%) outperformed their Vanguard competitor. Bogle's Folly, indeed."
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