Index Funds Beat Active Funds

The Sunday Oregonian ran an article in the business section (“In bear market, index funds outperform active investing”) about how poorly active managers have performed since the market reached its peak in the fall of 2007. It states that in 2008, 64% of actively managed U.S. stock funds were beaten by a broad market index, The Standard & Poor’s Composite 500.

Traditionally active managers were expected to protect investors during bear markets. The data does not bear this out. “The strident belief that active managers do well in a down market is a myth,” said Srikant Dash, head of research and design at Standard & Poor’s.

Cascade Wealth Management is one of the few investment advisory firms in the region that uses passive investment vehicles to build portfolios. Further, our investment advisory fees (0.75%) are significantly lower than those charged by most firms (1.0%). We are convinced that this approach results in lower expenses, greater tax efficiency and better long term performance.

I was not able to find a link to the article on the OregonLive web site. Please contact us if you would like more information about how passive investing can benefit you.