Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 
 
Blog Home
Bob Carey
Chief Market Strategist
Bio
X •  LinkedIn
 

  A Sight For Sore Eyes
Posted Under: International-Global
Supporting Image for Blog Post

 

View from the Observation Deck

  1. Each spring, Dalbar, a research firm based in Boston, releases the findings from its annual study ("Quantitative Analysis of Investor Behavior") measuring investor returns from mutual fund holdings. 
  2. One of the key takeaways through the years has been that individual investors are prone to moving their money in and out of the market at the wrong time, according to Louis Harvey, president of Dalbar.
  3. For the 20-year period ended 2012, investors in U.S. stock mutual funds posted an average annualized return of 4.25%, compared to an annualized gain of 8.21% for the S&P 500, according to Dalbar.
  4. Unfortunately, that means that the average investor in U.S. stock mutual funds has lagged the broader market's benchmark index (S&P 500) by 3.96 percentage points per year for the past 20 years.
  5. The chart above features net cash flows and total return figures for equity mutual funds and corresponding indices invested in foreign stocks representing both developed and emerging/developing nations.
  6. What we find most encouraging about the data is the consistency with which retail investors have committed capital to emerging markets equity funds, especially in 2011 when returns were poor.
  7. The International Monetary Fund sees much faster growth in the "Emerging Market and Developing Economies" moving forward. It has a GDP growth rate estimate of 5.3% (2013) and 5.7% (2014) for this category.
  8. Its estimates for "Advanced Economies" are 1.2% (2013) and 2.2% (2014).
  9. Is it possible that retail investors are actually "playing this one by the book"? We'll keep an eye on it.

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. The MSCI World (ex-U.S.) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.

To Download a PDF of this post, please click here.

Posted on Tuesday, May 21, 2013 @ 3:54 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
MARKET ANALYSIS
Market Commentary and Analysis
Market Commentary Video
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email
 


 PREVIOUS POSTS
379 Months And Counting
An Eventual Sell-Off In Treasuries Could Sting More Than Just A Bit!
Comments on Market Corrections
Commodity Prices Battling Stronger U.S. Dollar Among Other Things
One Way To Make Investing A Bit Less Taxing
Profits! Not the Prophets of Doom.
Nothing To Fear But Fear Itself So Far In 2013
Even Volatility Is Relative
It Was Short And Sweet For Bond Investors In Q1
The Epicenter Of The Stock Dividend Story
Archive
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.