Goldman Sachs analysts reviewed the performance of 248 large cap equity mutual funds with a combined $US730 billion under management. These are the funds that invest in companies you might find in the S&P 500.
Indeed, many of the fund managers in this category try to track the S&P 500 closely, but actively make tweaks in their investments in their efforts to beat the S&P 500. This is where they attempt to earn the fees that they’re paid.
The Goldman analysts found that after fees only 43% of the funds have outperformed the S&P 500 so far in 2015.
Though this is above the 10-year average of 36% of funds outperforming, this means that 57% of funds are still underperforming the market this year.
In other words, in the majority of these funds, investors are paying additional fees to money managers so they can allocate the money in a way that makes fewer profits than if they were to simply invest in the S&P on their own. Is it finally time to buy that passively managed index fund?