Active Fund Managers versus Index Fund Managers

Active fund managers (charge higher management fees) try to beat the market by identifying good stocks. Index fund managers (charge lower management fees) try to mirror the market index. A recent survey by research house Standard & Poor's is summarised in the table below.

Percentage of share funds that failed to outperform benchmark indices in periods to 30 June 2009

Focusing on the 3 and 5 year returns, all active fund managers failed to outperform the benchmark indices with the exception of the Australian small caps category. This is a very poor result for active fund managers. Note, the percentages are averages and there are a small group of active fund managers who consistently outperform the benchmark indices - do you hold these active funds in your portfolio?

Important Information

The above information provides an overview or summary only and it shouldn’t be considered a comprehensive statement on any matter or relied upon as such. The above information doesn’t take into account your personal objectives, financial situation or needs. It’s important for you to consider these matters before making any financial decision and I recommend you seek help from a financial adviser.