Meanwhile, a rolling debacle for stock mutual funds

Barron’s has some details about the performance of equity mutual funds during Q3 2014.  There’s not much left to say anymore about active stockpicking in a mutual fund wrapper.

The 8,112 diversified U.S. equity funds, with a collective $5.9 trillion in assets, lost 1.95% for the quarter, while Standard & Poor’s 500 index funds returned 0.99%.

This was the first loss for actively managed stock funds since the second quarter of 2012. But it was hardly the first time that active managers failed to beat the broad market; they trailed index funds in seven of the past 10 quarters.

Josh here – investors responded by yanking another $12.9 billion from stock mutual funds over the last three months. They just don’t believe in the managers anymore or the benefits of the product. Michael Santoli makes a similar argument here.

One thing worth mentioning – there probably shouldn’t be 8000 + of these funds anymore. Maybe with 4 or 6 thousand, the task of beating one’s benchmark and peers wouldn’t be so impossible. But who’s going to cry uncle and wind down? Nobody anytime soon.

Sources:

A Poor Stretch for Funds (Barron’s)

After Bill Gross drama, the era of star investors isn’t over – it’s just different (Yahoo Finance)