"And The Beat Goes On" - Passive ETFs v Top 100 Mutual Funds

To see what happened in 2023, the year of hyperbolic predictions, lets start with 2020 (arbitrary, yes, but cherry picking? NO-it includes the disasterous covid market collapse). Below is the classic stock, bond and commodity performance normalized where 1000 = 12/31/2019:

SPY = SPDR S&P 500 ETF

DJP = BARCLAYS PLC Bloomberg Commodity ETF

AGG = iShares:Core US Aggregate Bond ETF

Source: Microsoft StockHistory

The exemplary performance of commodities, up 80% in mid-2022, fades and is then eclipsed by today's stock market close. Bonds, as usual, fail to disappoint, with their usual dismal performance-FED or no FED.

Looking at the numbers, with major stock index ETFs added for good measure:

Continuously Compounded returns.

QQQ = Invesco Nasdaq 100 ETF

IWM = iShares Russell 2000 ETF

Source: Microsoft StockHistory

Notice, how convenient of SPY and QQQ to mirror image the 2022 loss into a 2023 gain. It's like 2022 never happened, except for small caps, bonds and commodities. So much for "passive" returns. 

Active Manager Returns

So, how did "active" managers do in 2023? Its hard to tell. Who publishes or computes reliable, unbiased DAILY active manager returns? We have to rely upon reasonable proxies. Even that's hard to do. But let's try. 

Millions of people go to Yahoo Finance for investment information and Yahoo publishes THEIR listing of "Top Mutual Funds Today". 

Only FOUR funds out of the "TOP 100" beat the SPY in 2023! Here they are with the rest of the leaderboard added:

Source: Yahoo Finance

Actually, only two managers exceeded the 21.7% return of the SPY ETF, Artisan and Blair. Is one year fair? Look at the 4 year total return - this will show the superior ability of active managers/humans/algos to avoid losses that passive managers cannot:

Source: Microsoft StockHistory

The top managers DID avoid much of 2022's losses well, except for WESJX. But they also avoided lot's of gains. If you think you can do better than the largest most well funded fund managers in the world-more power to you. But relying on reported numbers we are left with the unavoidable conclusion:

For the major passive stock ETFs versus active management, it goes like Sonny and Cher say: "And The Beat Goes On". 

Why use  the Microsoft StockHistory function for historical prices? It's free and easier than Yahoo-but beware a few missing days. You might notice the difference between the funds returns computed from Microsoft Stockhistory and the return reported by Yahoo. I can't account for that but will give Yahoo, the higher numbers, the benefit of the doubt. Contact me at infor@VistaMktResearch.com. Copyright 2024.