4 ms·
Umm, fun joke, but 2% over- or under-performance is HUGE, especially compounded over years. It is the reason behind the common recommendation to buy only low-l
by toss1 3y ago
Umm, fun joke, but 2% over- or under-performance is HUGE, especially compounded over years.
It is the reason behind the common recommendation to buy only low-load or no-load funds; because a 1% or 2% load vs a zero or 0.1% load is almost impossible to overcome — over time, the no-/low-load funds will win.
- hklgny 3y agoThe comment wasn’t that 2% doesn’t matter. It was that even with the 2% from your ugly fund manager you should still just buy index funds
- mandelbrotwurst 3y agoThe average fund manager does not underperform by more than 2%.
- hklgny 3y agoThe average includes the over performers
- huijzer 3y agoThe incentive for fund managers is to make as much profit as possible and not care much about losses. If you take into account that fund managers typically blow up every 10 or so years, then they do underperform by more than 2%. Read Taleb's books for more information.