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Matt's Market Insights

Here's an interesting consideration: As of December 19th, 79% of US equity funds are failing to outperform their benchmarks this year. For many of these managed funds, the benchmark is the S&P 500, though sometimes individual funds will benchmark to separate indexes that better resemble their particular makeup or investing style.

 

It's remarkable to consider that 8 out of 10 fund managers collected hefty management fees this year in exchange for providing investors with subpar returns. This is one of the reasons it is often advisable to invest in passive ETFs (such as DIA, SPY, or the various sector SPDR ETFs). Passively managed funds remove the "fund manager" from the equation and instead rebalance on an ongoing basis to maintain proportion with the index they are designed to track. As a result, there is no need to collect hefty fees from investors to pay a team of analysts, resulting in less erosion ... Log in or subscribe to continue reading.


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