How are individual investors doing

Comparing individual investor returns to market averages tells a sad tale. Over the past 20 years, investors have lost 60% of their investment returns due to:

  • The investment industry's focus on gathering new investment funds, instead of growing assets;

  • Fees and expenses that have not come down to match economies of scale or competition;

  • Active management that chases short term results, often jumping on the bandwagon when it's too late. 

The chart shows how the average Stock Market Index Fund closely matched the Stock Market average return over 20 years, while the Average Fund (including actively managed funds) lost 1/3 of its return to fees and owning the wrong investments. The average, using timing and chasing "what's hot" lost 60% of the returns available to them in the market average.  

In testimony before Congress, John Bogle discussed how active investors lost their returns, saying:  

"No, most fund investors have not been given a fair shake." 

Read the text of John Bogle's comments before Congress







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