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Fund Spy

Who's Trounced the Fund Averages? We Have.

The average dollar invested in mutual funds has outgained the average fund. Why? Cheaper U.S. stock funds have crushed.

Executive Summary
The average dollar invested in mutual funds earned a higher net return than the average fund did over the trailing one-, three-, five-,  10-, and 15-year periods ended Jan. 31, 2020. This performance has been consistent, with the average dollar topping the average fund in every calendar year we examined, including 2019 when it outperformed by nearly 3%. This outcome is largely explained by two factors--investors’ preference for lower-cost funds, which have outperformed, and U.S. stock funds’ strong returns, as such funds are home to a disproportionate share of assets. In particular, the strong performance of U.S. large-blend and large-growth funds has buoyed asset-weighted average returns.

Study
We compiled the monthly net and gross returns and monthly net assets of all U.S. mutual funds for the 15-year period of Feb. 1, 2005, through Jan. 31, 2020. This included dead funds (that is, those that have been merged or liquidated away) but excluded fund of funds. The study does not include exchange-traded funds.

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