Question: What Percentage of Investment Managers Beat The Market In 2014?

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Mar 18, 2015
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Behavioral Finance, Question of the Day, Index Funds, Investing, Stocks, Current Events

Answer:  Not many!  Only 14% of managers who invest in large-capitalization companies beat their benchmarks last year.

From CNN Money:  

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.

Not just a short-term phenomenon 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.

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This article can be a great jumping off point for a discussion about the difference between active (i.e., buying a mutual fund that has a professional money manager running it) and passive investing (i.e., buying an index fund that passively tracks a market index, such as the S&P500) when it comes to performance, fees, strategies and why investors would choose one over the other (See this earlier NGPF post about overconfidence and investors’ belief that they can choose winning investment managers).

Here is NGPF Activity that teaches students about the impact of investment fees over the long-term.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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