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Investment Fund – The investment fund that has been behind the US market for 93 years News

Sunday, August 27th, 2017 | Economy

Since its opening in the 1920s, the "Massachusetts Investors Trust" has survived 16 recessions, around 20 bear markets and even worse. But what he did not succeed in doing was to hit the equity market in the long term.
Sure, the fund had many good years. Beatty, for example, surpasses the S & P 500 index for 2017. However, over the lifetime of the fund, it falls short of the broad US equity market. This is a sobering thought of the fact that active asset managers in today's world are struggling with the unrelenting rise of passive strategies and computer algorithms.
From the late 1920s to July 2017, an index of the largest US stocks would have generated a cumulative return of around 673.360 percent. The Massachusetts Investors Trust yielded, however, only a yield of 256.766 percent.
It is not a perfect comparison. In the early days, none of the indices investors trusted today were present. The S & P 500 was introduced in the 1950s. However, a proxy index could be traced back to the largest US companies by Morningstar until 1926. This is less than two years after the launch of the Massachusetts Investors Trust.
"I do not want to mess something"
Beatty, 56, says, occasionally he feels the burden of history. He led the 6.3 billion fund since July 2004, achieving an average annual return of 8.7 percent compared to 8.3 percent for the S & P 500.
Nevertheless, around 770 million dollars – roughly – last year from the fund flowed, show estimates of Morningstar. In the past 15 years it was even 7.5 billion dollars. This reflects the industry-wide trend towards cheaper, passive investment funds.
"Now and then, when I hear it's the first investment fund, I think I do not want to screw up something that was the first," says Beatty. When the Vanguard Group began to offer index funds four decades ago, the idea seemed initially crazy. Today, more than a third of all assets in the US are in passive funds.
In the offices of MFS Investment Management, the company behind Beatty and co-fund manager Ted Maloney, today's upheaval in the investment sector can feel far away. In the entrance area are old paper registers, with entries in italics – proof of the long history of the company and its permanent commitment to active investment management.
Beatty, the Chief Investment Officer for global equities at MFS, remains behind active fund management and the long-term approach of his fund. "I still believe in the ability of good active managers to hit the market," says Beatty. "To the extent that we bring good performance, the tributaries will come."
(Bloomberg)

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