Most of our clients know we are big believers in low cost investing with passive investment vehicles. Although it is easy to grasp the concept of paying lower costs, it is harder to grasp that you can pay lower costs and also outperform most other investments.

The most recent SPIVA report, published by Standard & Poor’s, is now available. In 2014, over 86% of mutual fund managers (large cap) underperformed their benchmarks. Although this makes a pretty good case for investing in indexes (ETFs), mutual funds still outnumber ETFs by 10 to 1, based on assets under management.

Pundits used to argue that inefficient asset classes could outperform the market, but as you can see in the report, it is pretty standard across the board, active management loses over nearly every time period and asset class!.