Saturday, August 23, 2014

Sunday N&O Column on Mutual Fund Performance and Pe


  1. Thanks for the column, almost always give them a read, depending on subject matter; appreciate your experienced, no-nonsense approach with its un-biased quality.

    One thing in particular in this column I wanted to question. You said "The number of consistently excellent managers is even lower ... In other words, investors would have done better by flipping a coin."

    While there is no one who can give me the inside line on the coin flip outcome the S&P information is different. Their report numbers are SUMMARIES. It seems the DETAIL data they analyzed might be interesting to know.

    Just who were the 4.7% of "successful" small cap managers you mentioned. The S&P INDICES VERSUS ACTIVE FUNDS (SPIVA) U.S. SCORECARD I found via Google addresses the characteristics you talk about and some of the "success" numbers seem a little plumper than those you mention. Is there something wrong with seeking out and examining these funds for chances better than a coin flip?

  2. There's nothing wrong with trying to examine the successful funds. The question are: will those funds continue to be successful in the future? Is there a characteristic for that small group that can predict future success? I've spent over 30 years looking, and have yet to find the secret.