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Sunday, June 24, 2012

How Did the Stock Pickers/Market Timers Do?

Standard & Poor's  tracks active fund manager performance relative to their index and calls this scorecard SPIVA (Standard & Poor's Indices Versus Active).  This is a comprehensive data set that strives to make apples-to-apples comparisons.  It studies consistency, takes account of survivorship bias, examines style drift, etc.

If you are interested in detailed information and trying to make up your mind on this important issue, you should spend some time reading the study.

Here are some broad results through the end of 2011:

% of Actively Managed Funds That Beat Index Over Past 5 Years
U.S. Large Cap Growth Stocks
U.S. Small Cap Value Stocks
Int’l Stocks
High Grade Bond Fund s (Interm.-Term)
Intermediate Gov’t. Bond Funds
Source: Standard & Poor's

Sooooooo...if we step back just 5 years and get together 100 large-cap growth stock active managers, 20 are going to outperform.  Seems like we are in a "Dirty Harry" situation-

"Did he fire six shots or only five?"  Well, to tell you the truth, in all this excitement, I kind of lost track myself.  But being as this is a .44 Magnum, the most powerful handgun in the world, and would blow your head clean off, you've got to ask yourself one question:  Do I feel lucky?  Well, do ya, punk? 

1 comment:

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