Thursday, March 15, 2018

The Case Against Actively Managed Funds,1953

Sixty-five years ago, as now, there were those who believed that mutual fund managers failed to earn  their keep.

This example comes from a review of Louis Engel's How to Buy Stocks. in the  April 20, 1953 edition of The New York Times:
[F]rom 1937 to 1950, fourteen of the biggest and best known mutual funds whose assets were wholly invested in common stocks showed a net gain on their holdings of only 2.2 per cent…. In contrast, the Standard & Poor’s index for ninety representative stocks showed an increase during this same period of 4.1 per cent.


Jim Gust said...

So if the fees and expenses of the mutual funds were 2.0%, they beat the S&P by 0.1% before fees. Seems about right.

That was long before index funds were a choice.

JLM said...

Before indexing, the cheapskate investor bought 20 well diversified stocks and achieved much the same result.