Our equity-focused American Funds have a track record of outpacing the market.
- In aggregate, U.S. equity managers have failed to consistently outpace the Standard & Poor’s 500 Composite Index.
- Cutting-edge research shows investments with two identifiable investment traits — low expenses and high manager ownership of funds — have tended to outpace the market index more frequently than peers.
- Adding investments from investment managers with proven track records of outpacing the market can improve clients’ investment outcomes.
Research Reveals Distortions of the Averages
Academic research tends to dwell on the fact that the average investment manager fails to outpace the market over meaningful time periods. It’s true. But this analysis often overlooks demonstrable evidence that while most investment managers lag their benchmarks, many have led. Specifically, U.S. equity managers have delivered index-beating results 42% of the time in the 20 calendar years ended December 31, 2016.
The question is why some investment managers are better than average and how to find them ahead of time.