Investor returns, misperceptions and the art of active management

The latest Mind the Gap study from Morningstar shows that, over the last decade, investors lagged equivalent market returns by an average of 1.7% per year. Compound this over a period of 10 years or more, and you end up foregoing a lot of money! In 2011 a study from DALBAR's Quantitative Analysis and Investor Behaviour group (QAIB) showed that in the preceding two decades, the average investor in an equity mutual fund under-performed the S&P 500 index by 4.3% per year, while investors in bond funds lagged the Barclays US Aggregate Bond index by as much as 5.5% per annum. Prior to t...