The fund industry is notorious for comparing the performance of their products to the wrong benchmarks and even made-up benchmarks. This is done to make a fund’s performance appear to be superior relative to something — even if that something makes no sense. This decadent practice harms the credibility of an industry that has lost so much in recent years.
What you believe about how markets work has a meaningful impact on long-term return. Do you believe markets are relatively efficient or do you believe there are ample opportunities for excess profits? Your beliefs drive investment strategy and your strategy drives portfolio performance. Big picture beliefs about investing can be divided into two categories. First, [...]
It’s hard for equity managers to beat their benchmarks, but it’s twice as hard for bond managers. A strong headwind pushes back performance. On average, actively managed mutual funds underperform index funds because higher fees drag down performance. Only 1 out of 3 actively-managed stocks funds beat its benchmark over a 5-year period. Less known [...]