90% of Mutual Funds Underperform Through Q3
Now that Q3 is over, we now know that 9 out of 10 managers of midcap stock funds failed to beat the S&P MidCap 400 Index according to a report in the Wall Street Journal.
Over the past 12 months ended September 30, the average midcap fund returned a negative 23.2% versus a decline of 16.7% for the index.
The Journal calls the performance of the actively managed funds "abysmal".
Actively managed small-cap mutual funds did little better over the same time period. Fewer than 20% of active managers were able to beat the unmanaged Russell 2000 index.
Investors are reacting by moving money away from actively managed mutual funds and into ETFs. The iShares Russell 2000 Index ETF (IWM) has over $15 billion of assets under management.
A complete list of mid-cap and small-cap ETFs are available in the ETF Directory.
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