I found this story today on page C13 of the WSJ. It seems to me that this should be the biggest story EVER since investors spend over $100 billion per year trying to beat the market. How does it end up buried at the back of the Journal? My theory is that the press is in cahoots with the active managers so they'll have some drama to write about.
Imagine a newspaper with no Madoffs, Blackrock, or hedge funds. How boring. Never mind that they are ripping people off.
Christopher
Managed Funds Take Beating From Indexes
NEW YORK -- Investors in actively managed mutual funds for the past five years have reason to wonder what they have been paying for: A new study from Standard & Poor's finds that 70% of large-cap fund managers who use the S&P 500-stock index as a benchmark for comparison have failed to match the performance of the index over that time.
That is double-bad news, given that the index was down 19% in the five years that ended Dec. 31. The failure of active management is replicated across almost all categories, not only U.S. stock funds but also bond funds and even emerging-markets funds.
What's more, those numbers are similar to the previous five-year cycle. From the close of Dec. 31, 2003 to Dec. 31, 2008, the S&P 500 fell 18.8%, but still beat 71.9% of U.S. actively managed large-capitalization funds, according to S&P Index Services.
"We consistently see that once you extend time horizons to five years, the majority of active managers are behind their benchmarks," said Srikant Dash, global head of research and design at S&P.
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