It's bad and it's getting worse. Every year, S&P Dow Jones Indices does a study on active versus passive management. Last year, they found that after 10 years, 85% of large-cap funds underperformed the S&P 500, and after 15 years, nearly 92 percent are trailing the index.
A study by Vanguard found that 18% of active mutual fund managers beat their benchmarks over a 15-year period.
Investor's Portfolio
The market average can be calculated in many ways, but usually a benchmark – such as the S&P 500 or the Dow Jones Industrial Average index – is a good representation of the market average. If your returns exceed the percentage return of the chosen benchmark, you have beaten the market.
Overview: Best low-risk investments in 2021
“It turned out that less than 1% of day traders were able to beat the market returns available from a low-cost ETF. Moreover, over 80% of them actually lost money,” Malkiel says, citing a Taiwanese study.
1. The Motley Fool Stock Advisor. The Motley Fool has been around for roughly three decades and has earned its place at the head of the table among long-term stock pickers.
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