How Did Stock Managers Fare in 2015?

Better Investing

What's Hot

2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

A new report rekindles an old debate: Should you invest in stock mutual funds that are actively managed?

A new report from the S&P Dow Jones Indices continues an old debate: whether you should invest in stock mutual funds that are actively managed or choose funds that are passively managed.

In 2015, a majority of active managers underperformed when compared with the relevant S&P benchmark stock market index, according to the latest S&P Indices Versus Active U.S. Year-End Report.

Better known as the SPIVA Scorecard, this biannual report “has served as the de facto scorekeeper of the active versus passive debate” since its inception 14 years ago, the 2015 edition states.

Actively managed stock mutual funds are run by financial professionals who decide which individual stocks within a fund to buy and sell. They make these judgments based on their expectations of future market performance with the goal of outperforming stock market indices — and they charge higher fees for their effort.

Passively managed stock mutual funds, often referred to as index funds, simply aim to mirror the success of a stock market index.

As Money Talks News founder Stacy Johnson explains in “Beginning Stock Investor? Here’s All You Need to Know“:

Owning an index fund is like owning the entire stock market, as represented by an index, like the S&P 500. Since all an index fund manager has to do is buy the stocks in the index, a chimpanzee could do it. And because management is simple, the fees charged are minimal.

So how did active managers fare last year? According the U.S. SPIVA:

  • 66.11 percent of large-cap managers underperformed the S&P 500 stock market index, which consists of a representative sample of 500 leading companies in the foremost industries of the U.S. economy and covers more than 80 percent of the U.S. equities market.
  • 56.81 percent of mid-cap managers underperformed the S&P MidCap 400 stock market index, which consists of 400 mid-sized companies and covers approximately 7 percent of the U.S. equities market.
  • 72.2 percent of small-cap managers underperformed the SmallCap 600 stock market index, which consists of 600 small-cap stocks and covers approximately 3 percent of the U.S. equities market.

Aye Soe, senior director of index research and design at S&P Dow Jones Indices, tells CBS MoneyWatch:

“Overall it was rather disappointing for equity managers, I have to say. [The volatile market] was precisely when we need active manages to do better on a relative basis.”

The news is even worse for active managers when their performance over the past five years and past decade were considered:

  • Over the past five years, 84.15 percent of large-cap managers, 76.69 percent of mid-cap managers and 90.13 percent of small-cap managers underperformed their respective benchmark indices.
  • Over the past 10 years, 82.14 percent of large-cap managers, 87.61 percent of mid-cap managers and 88.42 percent of small-cap managers underperformed their respective benchmark indices.

Where do you weigh in on the active-versus-passive debate? Let us know below or on Facebook.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: 8 Smarter Ways to Use Your $1,000 Savings on Gas This Year

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,872 more deals!