Quantitative Analysis of Investor Behavior 2012
Posted: Mon May 14, 2012 1:23 am
The QAIB examines the real returns earned by investors in equity mutual funds, bond mutual funds, and asset allocation mutual funds. Over the past twenty years, the average investor in an equity mutual fund has under-performed the S&P 500 Index by an annualized 4.3% per year. The S&P 500 returned an average of 7.81% for the 20-year period through 2011, but the average equity fund investor generated only 3.49% per year.
And unfortunately, the news just gets worse: In 2011 alone, the average equity fund investor generated -5.7% vs. the S&P 500 which generated 2.1% return (an under-performance of 7.85%). Investors in bond funds did far worse. Compared to the Barclays Aggregate Bond Index which has a trailing 20-year annualized return of 6.5% per year, the average investor in a bond fund gained an annualized return of only 0.94% per year over this same period. Investors in bond funds underperformed their benchmark index by -5.56% per year.
And unfortunately, the news just gets worse: In 2011 alone, the average equity fund investor generated -5.7% vs. the S&P 500 which generated 2.1% return (an under-performance of 7.85%). Investors in bond funds did far worse. Compared to the Barclays Aggregate Bond Index which has a trailing 20-year annualized return of 6.5% per year, the average investor in a bond fund gained an annualized return of only 0.94% per year over this same period. Investors in bond funds underperformed their benchmark index by -5.56% per year.