Dalbar Study of Average Small Investor Behavior

• In a study by Dalbar Inc. from 1985 to 2004 the average mutual fund investor achieved a 3.7% annualized return while the S&P500 achieved a return of 11.9% and inflation averaged 3%.
• The Dalbar Inc. study found that the reason for the average mutual fund investor’s low return was that these investors invested more in “Hot Performing” mutual funds at the end of bull markets and then became frightened and took money out of the market toward the end of bear markets.
• You might be surprised to find that institutional investors who get paid to produce high returns with low risk actually are not changing their asset allocations and investment choices frequently (see: full study from Dalbar Inc.).

Click to view: Dalbar Inc. Study

return: Who is Daniel Shore? »