According to Institutional Investor, just 12.9 percent of the 155 domestic equity funds that exceeded their benchmark in 2016 maintained their winning streak in each of the following three years.
That’s almost 13%. Is that good or bad? It doesn’t sound good as the chances are investors will fall into the remaining 87%. So over 3 years, there is an 87% chance of not outperforming. That certainly doesn’t sound good. Would you buy those odds?
But it doesn’t get better. The statistics are over 3 years. Over 15 years according to SPIVA data from March 2005 to March 2020, and incorporating some reasonable market reversals, the number is 11.6%.
Here’s the big question. If 13% did outperform, how do you choose funds within 13%? What methodology would you use? What methodology does your wealth manager use? Now you should be thinking, how are the investment professionals making decisions with my money? Clearly, there is more chance of them being in 87%, so what can you do to make sure you are in 13%…or better 11.6%?
A conversation?