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How Many Mutual Funds Routinely Rout the Market? Zero!

Not a surprise to me!



The bull market in stocks turned six last Monday, and despite some rocky stretches — like last week, when the market fell — it has generally been a very pleasant time for money managers, who have often posted good numbers.

Look more closely at those gaudy returns, however, and you may see something startling. The truth is that very few professional investors have actually managed to outperform the rising market consistently over those years.

In fact, based on the updated findings and definitions of a particular study, it appears that no mutual fund managers have.

I wrote about the initial findings of that study last summer. It is called “Does Past Performance Matter? The Persistence Scorecard,” and it is conducted by S.&P. Dow Jones Indices twice a year. The edition of the study that I focused on began in March 2009, the start of the bull market.


A collection of “Strategies” columns published in The New York Times.

Warren Buffett’s Awesome Feat at Berkshire Hathaway, Revisited MAR 7

Plenty of Noise, but Not Much Guidance From Fed or Company Reports FEB 28

Debt’s Two Sides: Riches and Misery FEB 21

The Great American Dream, Still Deferred FEB 7

The Strong Dollar Is Always Good, Except When It Isn’t JAN 24

See More »

It included 2,862 broad, actively managed domestic stock mutual funds that were in operation for the 12 months through 2010. The S.&P. Dow Jones team winnowed the funds based on performance. It selected the 25 percent of funds with the best returns over those 12 months — and then asked how many of those funds actually remained in the top quarter in each of the four succeeding 12-month periods through March 2014.

The answer was remarkably low: two.

via How Many Mutual Funds Routinely Rout the Market? Zero –

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