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Financial Happenings Blog
Thursday, May 28 2009

I have spent this morning cleaning up my email in box and catching up on some reading.  (A sure sign of procrastination before my upcoming CFA exam.)


During my reading I came across an article written by John Kavanagh published in the Sydney Morning Herald - The importance of being idle.


The article looked at analysis conducted by Standard & Poor's regarding managed equity and fixed interest Fund managed fund returns for the 5 year period ending 31st December 2008.  S&P found:


" that the S&P 500 index outperformed 71.9per cent of actively managed large-cap (investing in large-capitalisation stocks) funds. The S&P MidCap 400 index outperformed 79.1per cent of actively managed mid-cap funds and the S&P SmallCap 600 outperformed 85.5per cent of small-cap funds."


The report also looked at results for the 2008 year separately and found the following:




All Large-Cap Funds     54.3

All Mid-Cap Funds       74.7

All Small-Cap Funds     83.8

Large Growth            90

Large Core              52

Large Value             22.2

Mid Growth              89

Mid Core                62.3

Mid Value               67.1

Small Growth            95.5

Small Core              82.5

Small Value             72.6



Apart from the returns for the Large Value segment, the data points out that active managers have underperformed benchmark indices last year.  This result flies in the face of the argument that active managers better protect clients during bear markets.


The report adds further evidence that active management of investments does not benefit investors and provides further support for the approach taken by A Clear Direction in using passive, index based investments.  Please take a look at our Building Portfolios page for more information about this philosophy.



Scott Keefer

Posted by: /scott Keefer AT 10:23 pm   |  Permalink   |  Email
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