These Quality Large-Blend Funds Are No Benchmark-Huggers
Investors looking for managers who ignore the S&P 500 should consider these names.
With stocks in bull-market mode and the S&P 500 up 14% so far this year, index investors can be forgiven for feeling pretty good about "owning the market." After all, the core idea of index investing is not to try to outperform the broad market, but rather to embrace the concept that beating it over the long haul is pretty tough to do. And the fact that index funds tend to be cheaper than their actively managed counterparts is an added benefit.
Some fund managers can't resist the urge to hug the index, either, running portfolios with allocations that bear striking similarities to their funds' benchmark. This play-it-safe strategy allows these managers to avoid steep losses relative to the index while often charging higher fees for indexlike returns. For investors, paying higher fees for an actively managed fund that essentially does what a cheaper index fund does makes no sense.
Adam Zoll does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.