Active vs Index Funds
Debate on how actively managed hedge funds and investment managers consistently underperform passive index funds like the S&P 500, supported by studies, statistics, and Warren Buffett's bet.
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The performance of actively managed hedge funds would disagree with that. Doesn't seem like anyone can manage it consistentlyhttps://www.cnbc.com/2019/03/15/active-fund-managers-trail-t...
Why? Loads of private investment funds beat indices.
Its not just hedge funds. The same could be said for ALL active investment managers (and even many "index" funds). This has been well know for decades[1].Of course people who manage their own money do even worse[2]!Luckily we have index funds and some of them are well managed (i.e. deliver what they say at the lowest possible cost).[1] http://www.stanford.edu/~wfsharpe/art/
90% of managed funds have underperformed the S&P over the last 10 years and studies have shown the funds previous performance has little to no impact on future performance.https://www.cnbc.com/2019/03/15/active-fund-managers-trail-t...
Interested in how it performed vs basic index funds?
You are not an UHNW individual/institutional investor, so no "fund managers" of any note are going to waste their time on this wager."Beating an index" is really easy. Up to $10MM you can choose most any financial instrument class in the U.S markets and have a good probability of finding alpha for a long time (that would beat the S&P500 18.40% YTD). Many proprietary trading firms, or market makers, or quantitative trading shops do this regularly. Discretionary and
Well, 92% of actively managed funds underperform the S&P 500 on a 15 year trailing basis [1] so I'm going to say probably a lot.[1] https://www.cnbc.com/2019/03/15/active-fund-managers-trail-t...
Large fund managers (e.g. Fidelity) disagree with you.
1) Management fees. A fund will usually get ~1% as a management fee. That means that if their allocation strategy gives return of 5%, you will see a return of 4%. Index funds have really low fees (You can think of it as moving your average return up by 0.8%, that's very significant, especially when you consider that on average funds don't beat the market.2) Correct, the article
Let me guess: "top-performing" means "comparable to an index fund".