Hammering away at the misconception that it pays to seek active managers in supposedly "less efficient" sectors like small caps, S&P Dow Jones' Philip Murphy finds - even choosing among the top mutual fund share classes - an alarmingly small number of managers failed to beat the benchmarks.
Starting at the March 2009 bottom and going out five years, only 9 of 139 share classes beat the S&P SmallCap 600 benchmark (that's 5.9% of the starting set).
Where alpha might be able to be delivered though, is in choosing which benchmark to track. A fund tracking the S&P SmallCap 600 (IJR, VIOO) would have outperformed one tracking the Russell 2000 (NYSEARCA:IWM) by 23% over the 5-year period.
ETFs: IWM, TZA, IJS, TNA, IWC, UWM, VB, IJR, SLY, VBR, EES, RWJ, VBK, URTY, SCHA, TWM, IWN, IWO, IJT, RWM, SRTY, DWAS, SAA, VTWO, JKL, RZV, SLYG, SLYV, VIOO, SDD, PZI, RZG, FDM, SBB, RSCO, WMCR, VIOG, JKJ, VTWG, UKK, TILT, VIOV, FNDA, XSLV, FYX, FYT, EWRS, JKK, TWOK, SKK, VTWV, PXSV, SMLV, UVT, SJH, IESM, PXSC, VLU, FYC, PXSG