Latest news with #mutual funds
Yahoo
14 hours ago
- Business
- Yahoo
Like Active Management? Odds of Outperformance Are Slim
Time has not exactly been kind to active funds over the long haul. Just a third of actively managed mutual funds and ETFs beat their passive counterparts over a year, according to a new Morningstar report. And believe it or not, that's about as good as it gets, with the data finding that under 6% of active large blend funds beat index funds over 10 years, and under 3% of large growth funds outperformed passives. Stretch that out to 20 years, and the figures are 7% and less than 1%, respectively. However, short-term figures for active management were better for some categories of foreign stocks and intermediate core bonds. And investors' odds of picking winners in fixed income were considerably better in the long term than for equities. 'There is value in investing a small portion of your portfolio in an actively managed ETF,' said Alvin Carlos, managing partner of District Capital Management, citing low fees and histories of outperformance. 'It's easier to find good active ETFs for bonds. You can find a good one with a 0.10% fee. It's harder for stocks. The active stock ETF we may recommend to certain clients has a 0.59% expense ratio.' Morningstar's data showed that over a year, nearly 52% of active intermediate core bond funds did better than passive ones on an asset-weighted basis. Corporate bond funds are an entirely different story, with a scant 4% of active ones beating passives. READ ALSO: Liquid Staking Crypto Isn't a Securities Issue, SEC Says and ETFs for Risk-On Investors The Price Is Right … Right? As it turns out, costs do matter when it comes to active management, and having low fees is linked to higher odds of investors beating benchmarks over time, Morningstar found. That hasn't been lost on investors, who on average 'have chosen active funds wisely,' the report noted. Over 10 years, a dollar invested in active funds has, on average, beaten active funds as a whole, implying that 'investors favor cheaper, higher-quality strategies,' the authors wrote. Still, the odds are stacked against active: In the past 10 years, through June, 27% of actively managed funds that were in the lowest quintile by cost beat peers, while that was the case for just 15% of funds in the most expensive quintile, according to Morningstar. For US large-cap mutual funds and ETFs, there was a performance penalty that was higher for picking underperforming strategies than over choosing winners, the authors said. However, the benefits of choosing outperforming real estate and high-yield bond managers were greater than the costs of selecting low performers. Actively Recruiting: The findings come as managers and assets have been flocking from active mutual funds to ETFs (both passive and active) and as the number of actively managed ETFs on the market is growing wildly. In the first half of the year, nearly 300 new active ETFs launched in the US, per Morningstar. Getting advisors on board with strategies that, on average, are unlikely to beat the market is a challenge. 'I don't see any value in actively managed funds, given their higher expense ratios and frequent underperformance relative to passive investment products,' said Kevin Feig, founder of Walk You to Wealth. 'The vast majority of them don't outperform passively managed funds, and those that do rarely achieve the same feat over multiple years.' This post first appeared on The Daily Upside. To receive exclusive news and analysis of the rapidly evolving ETF landscape, built for advisors and capital allocators, subscribe to our free ETF Upside newsletter. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
31-07-2025
- Business
- Reuters
Indian markets regulator proposes overhaul of IPO structure for large issues
July 31 (Reuters) - India's markets regulator on Thursday proposed changes to the structure of large initial public offerings, including increasing the allocation limit for institutional buyers and reducing the share reserved for retail investors. The proposals come amid a surge in IPO activity in India. The Securities and Exchange Board of India (SEBI) noted that while average IPO sizes have been increasing, direct retail participation has remained flat over the past three years. For large public issues, retail subscription levels have been particularly muted, the regulator said. In a consultation paper published on its website, SEBI proposed that for IPOs exceeding 50 billion rupees ($571 million), the retail investor allocation may be reduced to 25% from the current 35%, while the allocation for institutional buyers may be increased from 50% to 60% in a graded manner. The regulator also proposed increasing the number of permissible anchor investor allottees for allocations above 2.5 billion rupees, aiming to ease participation for large foreign portfolio investors managing multiple funds. Additionally, SEBI suggested including insurance companies and pension funds in the reserved category of the anchor investor portion, alongside mutual funds. It proposed raising the reservation for life insurers, pension funds, and domestic mutual funds from 30% to 40% of the anchor investor portion - of which one-third would remain reserved for domestic mutual funds, while 7% would be set aside for insurance companies and pension funds. SEBI has invited public comments on the proposals until August 21. ($1 = 87.4960 Indian rupees)
