Less Than 7 Percent of US Active Equity Funds Have Beat the Market Past Decade

Re:Less Than 7 Percent of US Active Equity Funds Have Beat t... by jrochkind1 on Saturday April 15, 2023 @06:10PM (#35585092)

Thanks, that seems more realistic than the 15% I incorrectly came up with. 10% is what I had in my head as a very good but possible managed fund return -- and only 8% over the past 20 years instead of an unrealistic 70. This seems like a more realistic expectation.

So a conclusion might be: if you've been getting less than 8% (after fees) over ~10 years in any managed fund... you might want to reconsider your investments, seems like. But if you've been getting 8-10% or more, you're pretty good. Does that make sense?

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Re:Less Than 7 Percent of US Active Equity Funds Have Beat t... by belter on Saturday April 15, 2023 @06:15PM (#35585139)

I hope you realize these are extraordinary returns. Show me an active manager that can demonstrate consistent 8% returns over the last 20 years, and I will be at their door next Monday 08.00 AM.

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Re:Less Than 7 Percent of US Active Equity Funds Have Beat t... by jrochkind1 on Saturday April 15, 2023 @09:14PM (#35586341)

I _think_ I know of one but I may be misinterpreting.

But then, if you know this... have you switched any actively managed to funds to an S&P index fund? Why would this not be the obvious thing to do?

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Re:Less Than 7 Percent of US Active Equity Funds Have Beat t... by belter on Sunday April 16, 2023 @05:37PM (#35594506)

Investing with S&P index fund is the obvious thing to do. :-)

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Re:Less Than 7 Percent of US Active Equity Funds Have Beat t... by jrochkind1 on Sunday April 16, 2023 @09:36AM (#35589924)

This page from Jan 2022 suggests average fund returns over the previous 15 years (so that did include the bear market 2008, at that point, the article mentions) for "U.S. Large-Cap Stock" was 9.73%

https://www.thebalancemoney.com/what-is-the-average-mutual-f...

It does note that that includes "the average for all mutual funds, including index funds." But if the answer is "oh yeah, the index funds bring up the average a lot"... why would anyone use anything but an index fund?

Is it going to be a lot lower than that over 20, even though that already includes 2008?

I admit this is all pretty confusing to me.

What returns would you consider acceptable over 10-20 years? Or do you not even look at past returns when deciding whether to keep your money in a given fund, or invest in a given fund?

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Re:Less Than 7 Percent of US Active Equity Funds Have Beat t... by belter on Sunday April 16, 2023 @11:53AM (#35591125)

I am with Nicholas Taleb. Past returns are no guarantee. And in any case...

“They will envy you for your success, your wealth, for your intelligence, for your looks, for your status - but rarely for your wisdom.” ― Nassim Nicholas Taleb, The Bed of Procrustes: Philosophical and Practical Aphorisms

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Re:Less Than 7 Percent of US Active Equity Funds Have Beat t... by jrochkind1 on Sunday April 16, 2023 @07:15PM (#35595063)

I mean, that makes sense, but I'm having trouble understanding the practical implications.

If not on past returns, how do you decide where to invest your money? Have you ever decided to remove your money from a fund, on what basis would you make that decision?

There is _no_ returns that would cause you to re-evaluate your current investments? If you were invested in a fund that had given you say an average of 0.5% a year over the past 10 years, that would not cause you to re-evaluate your investment?

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Re:Less Than 7 Percent of US Active Equity Funds Have Beat t... by belter on Tuesday April 18, 2023 @11:04AM (#35614935)

> If you were invested in a fund that had given you say an average of 0.5% a year over the past 10 years, that would not cause you to re-evaluate your investment?

What about dividing funds for investment in three parts?

1-> Give to an active investor you respect

2-> One third to an Index Fund

3-> Last manage it yourself.

Compare performance after 5 years :-)

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