Mid-Cap Index Beaters
This week we launch a new series on quality funds that have outperformed their corresponding indexes over the medium and long term.
Beating the index. It's what every active fund manager and active fund shareholder hopes to do. But studies show that, over the long haul, beating the index can be very difficult, especially in some fund categories.
Russel Kinnel, Morningstar's director of mutual fund research, wrote last year about the debate between active investing--in which managers choose specific securities in pursuing an overall strategy--and passive investing--in which funds simply track an index. Kinnel studied success ratios--that is, the percentage of surviving funds outperforming their category averages--within various asset classes for the five-year period ended Dec. 31, 2010. Among domestic-stock funds he found that 39% of surviving passive funds outperformed their category averages during that period versus 34% of active funds that did so.
Adam Zoll does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.