Conventional Money Mangers vs the Markets

Investing your money to beat the market

There is a long debate on the ability for portfolio managers to outperform the market they invest in. The graphs below produced from the Standard & Poor’s (S&P) SPIVA report compares the performance of mutual fund money managers to their comparative index. The report adjusts for survivorship bias, and shows equal and asset weighted peer averages. The results show that indexes continue to outperform the majority of funds (only 2.7% of actively managed funds in Canada outperformed the S&P/TSX Composite Index over 5 years). Dimensional funds understands this and uses a modified index approach to show index beating performance over the long term.

Investors with long term growth in mind need to consider the above when making investment choices. People with specific risk and cash flow requirements may require the choice of individual securities.

Conventional Fund Managers Performance Versus the Market over 5 years (Year-End 2011)

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As you can see the results are very disappointing! There is hope for investors wanting to improve on their likely hood of beating the market. Dimensional Funds shows you the way.

Download the whole SPIVA Report