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Professionals Underperform the Index

It is interesting to read that once again the S&P Semi Annual Index Scorecard revealed that the vast majority of active fund managers continue to underperform their benchmark indexes.

This is alarming considering the costs of active funds can be up to 10 times more expensive than index fund equivalents and in the majority of cases you are getting no value for this.

The chart below has been extracted from the recent S&P Report with data as at 30 June 2012.

The evidence demonstrated in the table above suggests that once again Warren Buffett is correct in his viewpoint that most investors will do significantly better if they simply invest in index funds and manage their asset allocation.

"Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results of the great majority of investment professionals." Warren Buffett

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