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Study proves – Passive funds suggest active management long term News

Saturday, August 26th, 2017 | Economy

Medium-term actively investing bond funds, which have largely hit their benchmarks during the year, are lagging behind their passive counterparts after two decades, according to a Morningstar study published last week.
Investors are increasingly pouring into passive investing index investment funds and exchange-traded ETFs, with low fees and better performance. According to Morningstar, in the US, over the past twelve months, they pumped more than $ 700 billion into passive investment funds, while at the same time $ 214 billion was withdrawn from actively investing funds.
The fees, over all strategies and including emerging markets, make a difference in the relative performance and the "survival rate" of funds, according to the study by Ben Johnson and Alex Bryan. The survival rate is the percentage of the funds that last for a certain period of time.
"Costs play a role even in emerging markets," the authors wrote. The funds with the lowest costs in the category came to a success rate, which in the last ten years to June was 31.8 percentage points higher than the competitors.
Among the equity funds, it had the category of large-cap growth most difficult to outperform. Approximately seven percent of these funds existed after 15 years and were able to exceed their passively investing counterparts over this period.
Morningstar has evaluated over 3,500 active and passive US funds with a total investment of 10 trillion dollars for the study. This corresponds to about 60 percent of the market.
(Bloomberg)

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