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Monday, March 27, 2017

In Case You Were Doubting Index Funds

Posted by Tim Stobbs on June 26, 2008

The Globe and Mail had a great little article about the performance of active fund in the first quarter compared to their benchmark indexes. Guess how many actively managed funds managed to out preform their benchmark indexes? 30%, no. 20%, no. You can’t mean 10%, no.

Drum roll please. Only 8.2% of active funds beat their benchmark indexes. So that means 91.8% of all active funds can’t keep up to their indexes in Q1. Wow! I know active management sucked, but this is insane that most of them sucked a lot in Q1.

So there you go a compelling reason on why active management isn’t worth the fees. Buy index funds or better yet EFT’s and sleep easy knowing you are beating over 90% of the professionals out there. Damn, I wish it was only so easy to be that good at some other things in life.

Comments

5 Responses to “In Case You Were Doubting Index Funds”
  1. This reason and the low returns on index funds is why I will continue to pick my own portfolio, when I can.

  2. porpoise says:

    looking at data over a quarter is a poor comparison. More interesting is over 5,10 or 15 years. Anyways, I’ll take Francis Chou over index funds any day of the week.

  3. In general, all other things being equal, when the markets are trending lower… the higher fees of the actively managed funds will always make them lose more than index funds with their lower fees.

  4. Canadian Dream says:

    Porpoise,

    Oh there is always some exceptions. I’m just saying most funds suck.

    CM,

    Good point I didn’t think of it from that side.

    Tim

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