17 Managed Funds That Have Beaten The Indexes Over A 17 Year Period

Here are the International stock fund results mentioned above:

  Year   Index (VGTSX)
Performance
Average Fund
Performance
Difference
(+ = index outperforms)
(- = average fund outperforms)
2016 4.7 0.7 +4.0
2015 -4.4 -1.3 -3.1
2014 -4.2 -5.0 +0.8
2013 15.0 19.6 -4.6
2012 18.1 17.7 +0.4
2011 -14.6 -13.4 -1.2

The table shows that over the last 6 calendar years, it was the index fund that has underperformed the average International stock fund on average by 0.6% per year.

However, as shown below, for the 11 yearly periods between 2000 and 2010, the average International fund did very frequently underperform the index fund; the average yearly shortfall was 1.9%.

  Year   Index (VGTSX)
Performance
Average Fund
Performance
Difference
(+ = index outperforms)
(- = average fund outperforms)
(0 = neither measure outperforms)
2010 11.1 10.7 +0.4
2009 36.7 32.7 +4.0
2008 -44.1 -44.2 -0.1
2007 15.5 12.4 +3.1
2006 26.6 24.9 +1.7
2005 15.6 14.7 +0.9
2004 20.8 18.1 +2.7
2003 40.3 34.7 +5.6
2002 -15.1 -16.2 +1.1
2001 -20.2 -21.7 +1.5
2000 -15.6 -15.6 0

Over the entire 17 yearly periods, the International index fund came out beating the average International fund by 1.0%. However, as with the US focused funds above, the difference was not a surprise considering that the average fund charges quite a bit more than the index. (According to data from Morningstar, the average International fund charges an expense ratio that is about 0.2 more than domestic funds, or about 1.4% in 2014, and even higher in earlier years).

Therefore, a well-established, managed, internationally focused fund which charges considerably less than 1.4%, such as the five such funds included in the 20 listed above, should have a reasonable chance to come out as well as, or ahead of, the International index fund, assuming the above results are at all representative of many years of comparisons. Specifically, the five averaged a yearly average return of 8.8% vs. the yearly average of 5.1% for the index fund.

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