Mutual funds: an 'F' for performance

Mutual funds have fared miserably so far in 2011. Only 13 percent of actively managed mutual funds are beating their benchmarks.

By , Guest blogger

  • close
    Traders work on the floor of the New York Stock Exchange on Friday in New York. So far this year, most mutual funds have lagged their benchmarks. But strangely, that may be a good sign for the fall.
    View Caption

Who needs actively-managed mutual funds? No one does in a volatile year it turns out. Only 13% of actively managed mutual funds are beating their benchmarks this year, a horrendous Letter F report card for just about the entire multi-trillion dollar industry.

From Investment News:

Among 2,806 funds tracked by the brokerage, 47 percent underperformed their benchmarks by more than 2.5 percentage points this year, the most since the 55 percent recorded in 1998. Only 13 percent of the funds beat the market by the same margin. The underperformance accelerated last month, with the proportion of trailing funds almost doubling from July, according to JPMorgan data.

But here's the good news...

Recommended: Could you pass a US citizenship test?

JPMorgan also says that since 1995 "the market rallied in the last four months of a year in all but 2008, with the S&P 500 rising 8.5 percent on average." And they note that in years where a majority of fund managers are underperforming, there is an even greater tendency for stocks to go up as all that lagging money begins chasing returns - buying stocks, adding risk.

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here.To add or view a comment on a guest blog, please go to the blogger's own site by clicking on www.thereformedbroker.com.

Share this story:

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...