Latest SPIVA Report (yr end 2017) - Active Mgrs vs Index

https://www.spindices.com/documents...949258d87baaab3308dd9f9699d95214567589b005a6e

 

Interesting as always.

It’s not as bad as it looks at first glance.

Going down to the fund performance ‘average fund return’ and ‘asset weighted return’ the performance is pretty close. And that’s after fees for funds but before fees for index.

Would like to know the avg fees for the large/general funds measured.

In the small/mid cap space, the average fund performance beat the index on a dollar-weighted basis and an average basis.

Then there’s tax to consider of course. Guessing these were unlisted funds. Turnover/CGT may kill the returns.

Unless I’m looking at it wrong?

 

Actually it’s likely to be worse than it looks. Those funds that do outperform generally only tend to do so for relatively short periods before their luck runs out and another fund takes their place. Some shut down then restart with a different mandate etc etc. How in the heck do you pick the future consistent winners?

I’m a fan of indexing but I’m an even bigger fan of dividend investing. Whether the dividend focused LICs we invest in outperform the index is of little importance to us. Just as some feel more comfortable picking their own stocks knowing they may not outperform the index we feel more comfortable investing in LICs whose main focus is on reliable dividends. And fees fees fees are also important as is low turnover. Hence the preference for low fee, low turnover dividend focused LICs. If outperformance of the Index is a concern then place greater priority on buying LICs at a discount to NTA taking into account the long term average.

A combination of index ETFs and low fee dividend focused LICs hits the sweet spot for us in regard to income and SANF.

Some others (perhaps with vested interests) regard SPIVA data as being less useful as some funds are omitted etc. See following:

Six investment lessons from 15 years of data - Cuffelinks

 

The bogleheads will always beat more than half of the active investors while the active fees are higher.

It is pure math.

Go bogleheads.

 

I don’t get it, I thought I read they combat survivorship bias in the study somehow?

I’m taking generally that it doesn’t look that bad for returns as a group, not % of outperformers. It includes the good and the bad whether they’re consistent or not.

Maybe I should steer clear of this academic stuff - too bloody hard

In with you on that. The more I read about indexing the more I like it, but still prefer the income approach.

 

SPIVA at end of 2018

 

SPIVA | S&P Dow Jones Indices