86% of investment managers stunk in 2014

CNN Money ^

[Red in Blue PA]

The skills and expertise of fund managers are supposed to give them the ability to select better stocks and bonds than an index like the Dow or S&P 500.

The problem is that hasn't been happening lately.

A staggering 86% of active large-cap fund managers failed to beat their benchmarks in the last year, according to an S&P Dow Jones Indices scorecard released on Thursday.

And no, that wasn't a one-off blip either. Nearly 89% of those fund managers underperformed their benchmarks over the past five years and 82% did the same over the last decade, S&P said.

[Red in Blue PA]

Monkeys throwing darts at a list of stocks could likely beat the active managers. Amazing that so many trust their money to active managers when in fact this trend goes back to the 70's when Burton Malkiel first wrote about it in his book "A Random Walk Down Wall Street".

[4rcane]

I think Buffet once mentioned people are better off buying indexes than giving their money to investment managers because most managers are no better than the indexes. They really don’t have a clue about the market or the economy

[SeekAndFind]

SOURCE: http://seekingalpha.com/article/2008311-the-awful-truth-about-mutual-fund-and-hedge-fund-managers-performance

Below is the harsh reality when it comes to this professional manager performance.

In 2011, 79% of active fund managers didn’t beat the S&P 500 stock index.

In 2012, 66% of active fund managers didn’t beat the S&P 500 stock index.

In 2013, active fund managers came close to beating the S&P 500 index but still did not do so. In fact, according to McGraw Hill Financial Director, Aye M. Soe, CFA, as of mid-2013;

59.58% of large-cap funds, 68.88% of mid-cap funds and 64.27% of small-cap funds underperformed their respective benchmark indices. The performance figures are equally unfavorable for active funds when viewed over the three- and five- year horizons. Performance across all domestic equity categories lagged behind the benchmarks over the three- and five- year horizons.

When you add the fees that mutual fund managers make, it takes even more away from your mutual fund overall return. Mutual funds have raised their fees from an average of 0.62 % of assets to 1.11% of assets, an increase of 84%.

[Cry if I Wanna]

I think Buffet once mentioned people are better off buying indexes than giving their money to investment managers because most managers are no better than the indexes.

Buffet doesn't always beat thge averages either. I think he is about 50-50.

[crusty old prospector]

I’m all index funds. I’d rather be a consistent “B” student than an “A” one year, then a “D”, and so forth.

[stubernx98]

“Monkeys throwing darts at a list of stocks could likely beat the active managers. “

Right on, There used to be a monthly article in the WSJ in the 80’s that compared the 5 best Brokers with the reporter through darts at the stock listing page. They would compare the results with the recommendations by the broker. The Dart Board was #1 20% of the time and was beating the most brokers predictions all the time. That was it for me - Went to Stock funds. Hmmm wonder why they dropped that monthl article????

[Red in Blue PA]

I forgot about that......wonder how much they were paid to stop it?

[minnesota_bound]

One of my cousins manages money for clients. She is a millionaire. I can’t say if her clients are.... anymore : )