Active vs passive investment is a long-lasting debate: active funds will tell you they deliver alpha (extra returns), but for a fee. Passive investment simply tracks the index so it’s cheaper. The risk is you may underperform your peers.
New research from Thomson Reuters Lipper throws up an interesting twist in the debate: It found that less than half of the actively managed mutual funds in Europe outperformed their benchmarks over the past 20 years.
Active vs passive: What’s the point of investing in active funds (and paying high fee) then, if less than half of them beat benchmarks?
Actively managed bond funds fare better over 3yrs with 45.4% outperforming benchmarks, but proportion tail off dramatically over 10yr period
Interesting statistics from Reuters Lipper: only 40% of actively managed equity funds outperform benchmarks over the past 20 years
LONDON, March 16 (Reuters) – European stocks hit their
highest since July on Friday while the dollar and oil held firm
as recent robust U.S. and European economic data drove investors
towards higher-risk assets.
A potentially strong print on U.S. inflation due later,
driven by a recent rise in oil prices, could fuel more selling
in U.S. Treasuries and boost the dollar after the benchmark
10-year bond yield hit its highest since October on Thursday.
LONDON, March 16 (Reuters) – World stocks held near
the previous day’s 7-1/2 month high on Friday and crude oil
rebounded, sticking with a rally in riskier markets this week
due to robust economic data from both sides of the Atlantic.
U.S. shares gained on Thursday, with the S&P 500
closing above 1,400 for the first time since 2008, partly driven
by strong regional manufacturing data.
LONDON (Reuters) – This year’s surge in equities and other risky assets has been a relief for investors under pressure to boost returns after a dire 2011, but pension funds seem trapped in a low-yield world, aggravating their battle with demographic trends.
Despite equities enjoying one of the best annual starts in 30 years, the giant $35 trillion pension funds industry has seen its chronic funding gap widen this year – reflecting portfolios still laden with the low-return bonds whose yields they use to calculate their future liabilities.