Single Point of View

Single Point of View is our way to occasionally share planning ideas relating to personal finance. Our goal is to pass along concepts that you may not be exposed to on a daily basis.

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Stock-picking Mutual Funds die hard… for now

The ability of traditional Mutual Fund stock-pickers to deliver out-performance has been decaying for 2 decades. A recent WSJ editorial by renowned finance scholar Burton Malkiel sites the most recent stats published by Standard-&-Poor's and they are absolutely ugly. •“More than 90% of active US managers under-performed their benchmark indexes over a 15-year period.”  •“Over 85% of small-cap managers under-performed the S&P Small-Cap Index.” •“Since 2001, 89% of actively managed International funds had inferior performance. “ •“Even in less efficient Emerging markets, index funds outperformed 90% of active funds” The total value of US public stocks is worth 25 Trillion dollars, and though active stock-picking funds still dominate with market share at around 67%, over the last 5 years their share has declined by 12%.  In terms of new money flows, the Market-Tracking index products have been taking 75-80% of the available dollars. This is partly a reflection of younger investors’...
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