84% of Funds Lost to the Market

We’ve been fortunate at Crossing Wall Street to have beaten the market for five-straight years, and we’re on our way to #6. Sometimes we need to take a step back remind ourselves how difficult that is.

The AP reports that 84% of stock funds lost to the market last year:

Managers of stock mutual funds had an unusually tough time beating the market last year, with fewer than one in five achieving that goal, a study found. That’s the lowest number in the 10 years the study has been conducted.

About 84 percent of U.S. stock funds that are actively managed, rather than passively tracking an index, underperformed versus the Standard & Poor’s indexes representing the market segment the funds invest in. That’s according to S&P Indices, which on Monday released its 10th annual fund performance scorecard.

The market researcher found that fund performance was better over the past several years than in 2011, although a majority of funds still fell short. Over three years, from 2009 through 2011, about 56 percent of stock funds underperformed relative to S&P benchmarks. Over five years, 61 percent underperformed.

Going back 10 years, the average percentage of funds underperforming has been about 57 percent. Before last year, the worst year for manager performance had been 2006, when nearly 68 percent of funds were beaten by benchmark indexes.

Over the last 10 years, S&P says a majority of funds beat the market in just four times. The best year for fund performance was 2009, with 58 percent outperforming.

Posted by on March 12th, 2012 at 8:39 pm


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