Saturday, January 5, 2008

The Challenge

It is an extreme challenge to consistently beat the market. While there are some notable exceptions, professional fund managers do not have a good track record.

I recently came across these sobering statistics from Lipper Research...
  • The average mutual fund returns 2% less than the stock market in general
  • 80% of mutual funds under-perform the market in any given year
  • From 1984 to 1999, one of the largest bull runs in history, the majority of North American mutual funds failed to outperform the Wilshire 5000 index.
  • Most mutual fundsd have Sharpe ratios (a measure of risk adjusted return) of less than 1.0

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