The 2012 year end numbers have been compiled! Most active money managers as a whole underperformed as compared to the unmanaged S&P Indices or other comparable indices. Here are some of the highlights of the year end report.

US Equities

The unmanaged S&P 500 beat 63.25% of large-cap actively managed US Equity Funds

The unmanaged S&P Small Cap 600 beat 68.44% of all US actively managed Small-Cap Funds

US Fixed Income

Actively managed fixed income funds fared better than their equity counterparts in 2012. Most activley managed fixed income funds outperformed their benchmarks.

International Equity

Among the international equity categories, 66.26% of global funds, 56.27% of international funds, and 57.62% of emerging market activily managed funds were outperformed by benchmarks over the last three years. However, a large percentage of actively managed international small-cap funds outperformed the benchmarks regardless of the period measured.

As demonstrated below, it’s guessing game as to which active managers will beat their benchmark in the future!

S&P PERSISTENCE SCORECARD June 2012

Very few funds manage to repeat top-half or top-quartile performance consistently. Given the volatility in domestic equity markets over the last five years, it is unsurprising that the data for the period ending March 2012 show the percentage of top-performing managers remaining in the top-half or top-quartile declined considerably in several categories. For the five years ending March 2012, only 5.23% of large-cap funds, 5.14% of mid-cap funds and 6.25% of small-cap funds maintained a top-half ranking over five consecutive 12-month periods. Random expectations would suggest a rate of 6.25%.

For complete SPIVA Score Card reports visit www.spiva.standardandpoors.com.

The Latest Dalbar Report Found Average Equity Investors Underperformed the S&P 500 by 7.85%!

DALBAR, Inc’s Annual “Quantitative Analysis of Investor behavior 2012”

After conducting this year’s Quantitative Analysis of Investor Behavior (QAIB), Dalbar found that in 2011, the average equity fund investor underperformed the S&P 500 by 7.85%. The poor performance shows that psychological factors continue to harm the average investor and the remedies for these behaviors remain a work in progress.
The word volatility defines the year 2011 for the investment community and provides an ideal lens from which to observe the difference between average investor returns and reported mutual fund performance. This year’s report looks at the effects volatility in 2011 had on investor returns.

For more information about the DALBAR QAIB study, please visit www.qaib.com.

Premium Bonds

JBA offers Advisors Asset Management (AAM) managed bond portfolios as a standalone investment opportunity. These bond portfolios from time to time own bonds purchased at a premium.

In his article “Why Would Anyone Pay a Premium for a Bond?” AAM’s Mark Gregg; VP, Portfolio Analytics
Continue reading →

Dynamic Asset Allocation and Monte Carlo Simulation, What You Don’t Know Can Hurt You!

By John Berzellini

The combination of Modern Portfolio Theory, the Brinson Study, index funds, Exchange Trade Funds (ETF), derivatives and recent stock market volatility has caused a proliferation of an investment strategy called Dynamic Asset Allocation (DAA). Continue reading →

Advisors Asset Management – Strategic Times: The 2012 Annual Review and our best ideas for 2013.

JBA Financial Advisors works with other Investment Advisors (IAs) whom are solely focused on the money management aspect of comprehensive financial planning. Continue reading →

Why Don’t We Get a Market Rate of Return On Our Investments?

By John Berzellini

The 2011 spread between the average investor return and the S&P 500 return was 7.85% (see Dalbar on left side bar). As usual, the S&P 500 Index outperformed the average main street investor. Continue reading →

Another Wall of Worry

by Weston Wellington, VP Dimensional Fund Advisors
Reprinted with the permission of Dimensional Fund Advisors
By John Berzellini

We believe the financial media’s ravings, whether financial exuberance or doom and gloom, are a major factor contributing to the average investor’s subpar returns. In his most recent article (below) Weston Wellington points out stock prices are on the rise while the financial media is in its doom and gloom mode. Want to be a successful investor? Tune them out!
Continue reading →

A Funny Thing Happened On the Way to Economic Armageddon

by Scott Coyler, CEO Advisor Asset Management
Reprinted with the permission of Advisors Asset Management
Introduction
by John Berzellini

In his most recent blog article, “A Funny Thing Happened On the Way to Economic Armageddon” Scott Colyer, CEO Advisor Asset Management; reminds us of three absolute truths; Death, Taxes and Don’t Fight the Fed.
We may not be able to do anything about death and taxes, but let’s make sure our portfolio manager isn’t picking fights we can’t win!
Continue reading →

The Fed the Election and Retirement Planning

By John Berzellini

I recently attended a presentation by Greg Valliere, Chief Political Strategist of the Potomac Research Group. Greg is a widely quoted political analyst and regular guest on financial shows aired on CNBC, CNN and Fox TV. For more than 30 years, Mr. Valliere has advised institutional investors about how developments inside the Beltway affect financial market. Below are some of his informed comments on the Federal Reserve and the Election and my take on the political predictions.
Continue reading →

Fed Delivers another Big Dose of QE

By Scott Colyer, CEO Advisor Asset Management
Reprinted with the permission of Advisors Asset Management
Introduction
by John Berzellini

AAM’s Core Plus Managed Account was recently added to JBA Financial Advisors investment program offerings. We offer this managed investment grade bond portfolio, as an alternative to low yielding banks CDs.
In his most recent blog “Fed Delivers another dose of QE”, Scott Colyer CEO of Advisors Asset Management gives AAM’s take on the Federal Reserve new QE3 program, and their announcement to keep interest rates low until mid 2015.

Continue reading →

Withdrawing Money from Retirement Savings, Do We Have Enough to Retire?

By John Berzellini

There are a number of withdrawal methods used by financial planners, which are commented on from time to time in the financial press. Some of these withdrawal methods used in connection with asset allocation programs can put you in the poor house. Continue reading →

The Death of Equities, Revisited

by Weston Wellington, VP Dimensional Fund Advisors
Reprinted with the permission of Dimensional Fund Advisors
Introduction
by John Berzellini

We agree with Mr. Wellington’s message; the relationship of risk and return is a difficult principle for investors to apply year-in and year-out. Dalbar’s “Quantitative Analysis of Investor Behavior” (see our side bar), calculates the return realized by average investors as compared to “the returns the market has to offer”. BusinessWeek is now Bloomberg Businessweek but it sure sounds like the same old story to me, you be the judge. Continue reading →

Where's the Beef?

The latest S&P Report shows most active Equity Fund managers did not beat the indices, However, Fixed Income Fund managers fared much better in 2012.

Standard & Poor’s Indices Versus Active Funds Scorecard (SPIVA®)

Year-End 2012

The 2012 year end numbers have been compiled! Most active money managers as a whole underperformed as compared to the unmanaged S&P Indices or other comparable indices. Here are some of the highlights of the year end report.