Morningstar: Investors are Making Better Use of Their Funds

A recent article in Morningstar  highlights the firm’s research into historical trends in fund investor returns which show, “times have been good lately, and we can see that in a look at aggregate investor-return data through the first quarter of 2018.” The study analyzed open-end mutual fund investor returns over the trailing three-, five- and 10-year periods by asset class and by Morningstar category. By asset-weighting investor returns, the study was able to highlight the… Read More

Investors Spooked by the Market Tumble Should “Buy and Hold”

Highlighting the fact that future stock market movements are “unknowable” and that trying to predict them can be “dangerous,” a recent Wall Street Journal article quotes the legendary investor Peter Lynch: “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” The article says research data shows how individual investors lose over a “percentage point a year through timing errors,” and adds… Read More

The Biggest Failure of the Investment Management Industry

By Jack M. Forehand (@practicalquant) —  The investment management business has improved dramatically in the past twenty years. The days of brokers selling high priced products to unsuspecting consumers that serve no purpose other than to line their own pockets are mostly gone. Fees have also fallen drastically, and efforts to educate investors on them by people like John Bogle have led to substantially increased investment in index funds and other low-cost products, which is… Read More

What are Investor Returns, Really?

There is some confusion around why the total investor return data published by Morningstar differs from the returns that investors are actually earning. Russ Kinnel, director of manager research for Morningstar, unravels the discrepancy. Investors’ actual returns, explains Kinnel, are the dollar-weighted returns that reveal how well investors used the fund and how well they timed their transactions. If, for example, investors buy into a fund because it’s showing great returns, this flood of dollars… Read More