Like Active Funds? Odds of Outperformance Are Slim
Time has not exactly been kind to active funds over the long haul.
Just a third of actively managed mutual funds and ETFs beat their passive counterparts over a year, according to a new Morningstar report. And believe it or not, that’s about as good as it gets, with the data finding that under 6% of active large blend funds beat index funds over 10 years, and under 3% of large growth funds outperformed passives. Stretch that out to 20 years, and the figures are 7% and less than 1%, respectively. However, short-term figures for active management were better for some categories of foreign stocks and intermediate core bonds. And investors’ odds of picking winners in fixed income were considerably better in the long term than for…
