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By: Sam Instone

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August 8th, 2017

How to keep time on your side for investment success

Investment

[Estimated reading time: 2 minutes, 16 seconds]

There’s an old sports adage I’m reminded of every time I go for a run!

“Father Time is undefeated.”

Time BG.png

It means that age catches up and eventually defeats all athletes.

It’s applicable to investors too…

Don’t bet against time…it always wins.

The evidence - based approach: passive management or indexing

Here’s the evidence:

A winning active fund might beat the index over a 1, 3 or 5-year period...

But with time on its side…the index eventually wins.

Aye Soe, a managing director at S&P Dow Jones Indices, analysed the performance of 641 actively managed domestic equity mutual funds.

She found:

  • 7% of the top-performing funds in 2014 failed to deliver top returns just two years later…
  • And 99.7% of the top-performing funds in 2012 failed to deliver top returns four years later.

Time took all but 0.3% of them out.

Further evidence that Father Time is undefeated comes from the most recent SPIVA Europe Scorecard:

“euro-denominated active funds invested in pan-European equities underperformed their benchmarks across all time horizons analyzed”

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[Estimated reading time: 2 minutes, 16 seconds]

There’s an old sports adage I’m reminded of every time I go for a run!

“Father Time is undefeated.”

Time BG.png

It means that age catches up and eventually defeats all athletes.

It’s applicable to investors too…

Don’t bet against time…it always wins.

The evidence - based approach: passive management or indexing

Here’s the evidence:

A winning active fund might beat the index over a 1, 3 or 5-year period...

But with time on its side…the index eventually wins.

Aye Soe, a managing director at S&P Dow Jones Indices, analysed the performance of 641 actively managed domestic equity mutual funds.

She found:

About Sam Instone

Sam Instone, Director at AES International, is passionate about positive change and ensuring international investors get better results.

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