Yearly Reminder: The Importance Of Investing Passively

Here is a gentle reminder:

Just 25% of active fund managers that invest in large US-listed companies beat Wall Street’s S&P 500 index in 2021.

That is before fees.

Oh and before we forget, 2021 was supposed to be a "stock pickers year" for various reasons that clearly either didn't matter or didn't come to pass.

This means that, as we have mentioned before, stockpickers once again struggled to match the returns delivered by cheap index trackers following the US equity market.

No bueno.

And people noticed:

  • Withdrawals from actively managed US domestic equity funds reached $392.7 billion in 2021.

Conversely, passively managed ETFs, which track benchmarks such as the S&P 500 and the tech-flavored Nasdaq Composite saw major inflows.

  • US domestic equity ETFs attracted a net $476.4 billion of new capital in 2021, according to Citi.

  • If you are not already, you should think about joining them.

Still determined to beat the market?

  • Instead of investing with hedge funds or active managers, you might just want to run for Congress!

Despite a rather full year of legislating and taking care of their districts during a full blown pandemic, at least 35 members of Congress somehow found the time to beat the market according to their disclosures.

This may be negative for the country and trust in government but as the age-old American saying goes: If you can't beat'em, join'em!

We should stress that this was a bipartisan effort as well. Who says the Republicans and Democrats have nothing in common?

Another thing all Americans have in common is inflation......


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