The pros can’t beat the market.
So, what chance do you have?
The math is undeniable.
Over the long-term, passive investing (e.g., holding index funds) has outperformed professional investment managers. And it’s not a close race.
86%
of Stock Funds Underperformed
86% of actively managed U.S. stock funds underperformed their benchmarks over the past twenty years.
Source: S&P Down Jones Indices LLC | 2020 SPIVA® U.S. Scorecard (PDF)
97%
of Bond Funds Underperformed
97% of actively managed long-term investment-grade bond funds underperformed their benchmarks over the past fifteen years.
Source: S&P Down Jones Indices LLC | 2020 SPIVA® U.S. Scorecard (PDF)
88%
of Real Estate Funds Underperformed
88% of actively managed real estate funds underperformed their benchmarks over the past twenty years.
Source: S&P Down Jones Indices LLC | 2020 SPIVA® U.S. Scorecard (PDF)
As a group, active portfolio managers are terribly unimpressive.
The entire purpose of active management is to beat your benchmark. This hypothetical outperformance is supposed to justify the higher fees and expenses these funds charge investors.