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- As a group, the actively managed funds pretty much matched the S&P 500<\/strong>, with 12 beating the S&P 500 index fund and 13 lagging it.\u00a0 Their average performance was 4.16% vs. 4.08% for the index fund.<\/li>\n
- On a more positive note, 5 funds beat the index by over 200 bps<\/strong> while only 2 lagged the index by over 200 bps.\u00a0 This reflects good risk control by Fidelity.<\/li>\n
- Clearly it is difficult to beat the S&P 500 by a lot<\/strong> over a long time period.\u00a0 If you had a million dollars to invest, and you decided to invest $200,000 in five different Fidelity funds, and you were smart or lucky enough to select the five best performers (obviously highly unlikely), your annual return would be 7%, just 300 bps above the S&P 500.\u00a0 This is meaningful outperformance, but not huge considering you picked the five best funds.<\/li>\n
- These results show the importance of dividends<\/strong>.\u00a0 A 3% dividend yield equals three quarters of the total return of the S&P 500 over the past decade. And dividend payers tend to be less risky in terms of financial strength and stock price stability.<\/li>\n
- Keep in mind that the tenor of the equity markets is always changing<\/strong>; no two decades are alike.\u00a0 If you ran these results for a different decade with more dynamic stock markets, there probably would be a greater dispersion of results among the 26 funds.\u00a0 For the years 1991-2000 tech-heavy funds would have outperformed.<\/li>\n
- As always, \u201cpast performance is no guarantee of future results,\u201d so we would not necessarily<\/strong> purchase the Fidelity funds with the strongest 10-year results<\/strong>.<\/li>\n
- Fidelity\u2019s results seem to support the case for just investing in an index fund<\/strong>.\u00a0 But we have significant reservations about index funds, to be discussed in a future post.<\/li>\n<\/ul>\n
\nFidelity Investments Large-cap Domestic Equity Funds: 10-year\u00a0 Annual Performance<\/p>\n
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Source: Fidelity Investments Website<\/p>\n
(This commentary is not investment advice.\u00a0 See our important disclaimer.)<\/p>\n","protected":false},"excerpt":{"rendered":"
Wall Street is a selling machine, and investors are constantly hearing about spectacular gains from this or that fund or money manager or investment vehicle.\u00a0 Even if these reports are true, they may not be sustainable, may entail excessive risk, … Continue reading
- On a more positive note, 5 funds beat the index by over 200 bps<\/strong> while only 2 lagged the index by over 200 bps.\u00a0 This reflects good risk control by Fidelity.<\/li>\n
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