The Spritzler Opportunity Dart Throwing Fund has consistently beaten both the SP 500 and Dow for 15 of the last 20 years. The fund on Jan 1st of each year, has several lowland gorillas throw darts at a large board with a myriad of stock symbols attached...Fifty of the lucky winners comprise our fund.
The Spritzler Investment team having a few beers before game time.
Active vs Passive
Actively-managed equity funds are managed by professional fund managers who aim to outperform the market by selecting specific stocks, often incurring higher fees and trading costs.
Passive equity funds, on the other hand, track a specific index (like the S&P 500) to mirror market performance.
While active funds can potentially generate market-beating returns, passive funds tend to deliver more consistent returns with lower fees.
Geographically speaking, passive funds are more popular in the U.S., representing 50% of total mutual fund and ETF assets. Across the rest of the world, passive funds account for only 26%.
According to this data, there have only been three years since 2001 where a majority of active funds beat the S&P 500 index: 2005, 2007, and 2009.
This highlights the difficulty of beating the market, and why you should always do your research before investing in an actively-managed fund.
Referencing our past infographic which plotted 150 years of S&P 500 returns, we can see that 2005 and 2007 were both normal years for the index, logging a +4.9% and +5.5% gain respectively.
2009 was a relatively stronger year, with a +26.5% gain. A majority of active funds beat the index during this year due to the market volatility that followed the 2008 financial crisis.
High volatility can create opportunities for skilled fund managers to pick undervalued stocks and adjust their portfolios quickly.
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