Low management cost: It’s a must to beat the market

S & P Dow Jones Index has begun to report the relative returns of actively managed funds compared to their benchmark indexes with a 10 year horizon.

Results clearly show how 86% of them have not been able to beat their respective 2014 year end benchmark. If we analyse longer periods of time this percentage doesn’t show a significant improvement. If we think of it the other way around, in 5 and 10 years (only) the 11% and 18% respectively of the actively managed funds were able to overcome their benchmarks.

Funds that follow the European market and other international markets have similar data. This only confirms and reinforces a report written by IESE, that covers the period 1998-2013 and that reaches coinciding conclusions.


Therefore, it seems extremely difficult for an individual investor to find among all the funds the one with enough profitability to justify paying the fees associated to that particular fund. Altogether, these actively managed funds have transaction costs, commissions and manager’s salaries all of which have a great impact on the investors’ final results.

You can only beat the market by starting to reduce costs as much as possible.

It has been proved that keeping low costs generates a long term differential that follows the same multiplicative effect as the magic compound interest.

Inbestme offers very competitive costs: our management commissions are low and we use ETFs (low cost indexed funds). This allows us to create efficiently diversified portfolios.

Know your investor profile and start investing as soon as possible.

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