Claim 4 of 22
Index funds: own the index
Do professional fund managers beat a fund that copies the market?
Verdict
Holds
Over every period of five years or longer, at least 83 per cent of US large-cap funds, at least 92 per cent of UK large- and mid-cap funds and at least 81.6 per cent of Australian equity general funds lagged their index, and the one figure below 80 per cent over those periods, UK small-cap funds over 10 years at 76.62 per cent, is still a majority.
The cost, from the book's own figures. Over ten years the average fund compounded 10,000 to $34,157 against $42,286 for its benchmark in the United States, to £18,877 against £23,051 in the United Kingdom and to A$21,490 against A$24,669 in Australia, which is 19.2, 18.1 and 12.9 per cent less.
Made by: Bogle, Malkiel, Robbins, Booth, Collins, Sethi.
Test it on your own numbers
- United States: Investor.gov Fund Analyzer (investor.gov/financial-tools-calculators/financial-tools/mutual-fund-analyzer), to estimate what a fund's fees and expenses take from an investment.
- United Kingdom: MoneyHelper, A beginner's guide to investing (moneyhelper.org.uk/en/savings/investing/investing-beginners-guide), to read about charges such as the Ongoing Charges Figure (OCF).
- Australia: Moneysmart, managed funds fee calculator (moneysmart.gov.au/managed-funds-and-etfs/managed-funds-fee-calculator), to compare the effect of fees between funds.
The full test, with every figure dated and sourced, is in chapter 4 of the book.