Terry’s Columns Pros Don’t Beat the Markets!

Pros Don’t Beat the Markets!

By Terry Savage on March 16, 2022

Do you think you can “beat” the market? Well, take a look at these new statistics. Even the highly-paid money managers fail dismally at the challenge of beating their benchmark indexes. This morning S&P Dow Jones Indices released the latest damning figures!

The numbers speak for themselves, so here is a “cut and paste” from their press release (with my highlights), and a link to the entire study and its revealing graphics.
The S&P 500® gained 28.7% in 2021, capping an impressive 100.4% cumulative advance over the past three years.

The positive market performance translated into good absolute returns for active fund managers, although relative performance continued to disappoint: 79.6% of domestic equity funds lagged the S&P Composite 1500® in 2021.

Large-cap funds continued their underperformance for the 12th consecutive calendar year, as 85% of active large-cap funds trailed the S&P 500.

In 16 of the 18 categories tracking U.S. equities-focused funds, more than half the funds underperformed their benchmark. Particularly noteworthy were the 98.6% of large-cap growth funds that failed to beat the S&P 500 Growth—not only the worst-performing category in 2021, but the worst performing of any U.S. equities category in the past 21 years.

Mid-cap (62%) and small-cap (71%) funds acquitted themselves slightly better relative to the S&P MidCap 400® and S&P SmallCap 600®, but still offered scant reason to celebrate.

The Savage Truth: You don’t have to “beat” the market. All you have to do is BE the market — over the long run — to succeed at investing!



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