Zeev's Turnips Patch-No Politics (ZEEV)

[marketmaven]

LOL FILES: Active Managers Underperform 2005 Indices
(And US leadership is seriously lacking in protecting our long term competitiveness.. .http://online.wsj.com/article_print/SB113807289316854416.html)

Indexes outperformed managed funds in 2005-report
Mon Jan 23, 2006 11:52 AM ET


NEW YORK, Jan 23 (Reuters) - Chalk up a few victories for the market-efficient disciples. Stock market indexes outperformed a majority of actively managed funds in six out of nine style boxes in 2005, Standard & Poor's said on Monday.

The S&P MidCap 400 outperformed 76 percent of actively managed mid-cap funds, and the S&P SmallCap 600 outperformed 60.5 percent of actively managed small-cap funds in 2005, the company said in a report.

But 55.5 percent of actively managed large-cap funds in 2005 outperformed the S&P 500 Index , a widely use gauge for over-all market performance, the report said. It was the first time managed fund outperformed the S&P 500 since 2000.

Proponents of the efficient market theory say stock prices already reflect news and other fundamental information about a company. As a result, they say stockpickers have difficulty beating the returns of an index.

Actively managed large-cap funds benefited by being overweight in such leading sectors as energy, real estate and utilities, said Rosanne Pane, a mutual fund strategist at Standard & Poor's. Large-cap funds that could invest in foreign companies were also helped by international markets, which outperformed the U.S. markets last year, she said.

The report showed that over the long term indexes also had done better. Over the past three years, the S&P 500 has outperformed 61.9 percent of large-cap funds, the S&P MidCap 400 has outperformed 70.4 percent of mid-cap funds, and the S&P SmallCap 600 has outperformed 71.4 percent of small-cap funds.

Similarly, over the past five years, the same indexes outperformed 65.4 percent of large-cap funds, 81.3 percent of mid-cap funds and 72.4 percent of small-cap funds.


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