Re: Why Mutual Funds are better than Index Funds
The average S&P 500 index fund returned 5.73%, 7.65%, -2.91% and 9.47% for the past 1 year, 3 years, 5 years and 10 years respectively. (annualized annual returns)
The average multi-cap value fund returned 10.73%, 10.08%, 6.22% and 10.14% over the same horizons.
The average mid-cap value fund did even better, where as large cap value funds did somewhat worse. Growth funds did somewhat worse than value funds, but still tended to beat the S&P 500.
These are not the best of the actively managed funds, these are the averages (after fees and expenses - as reported by Barron's in their quarterly mutual fund review, Monday July 11, 2005).
Actively managed stock funds will not always beat the S&P 500 index funds, but they have, on balance, over the past decade. The best performing funds, of course, killed the indices.
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