Active Management Is Back in Favor
Chart of the Week for August 25-31, 2000
As recently as a year ago, many pundits were suggesting that investors forsake active management and instead buy an S&P 500 index fund. Since most active managers weren’t beating the S&P 500, they reasoned, why pay the costs associated with active management?
Well, the investment environment in the year 2000 has proven that active management can provide essential benefits. The market has been volatile this year, but active managers have helped investors preserve assets. For the year to date through July 31, 72% of active equity managers beat the S&P 500, even though many market indexes were performing more poorly than the S&P 500. This is the highest percentage of active outperformance in the last ten years.
S&P 500 index funds can play an important portfolio role as a means of gaining low-cost core equity exposure, and as an attractive choice during periods of large-cap dominance like 1995-1999. However, actively managed funds offer specialized expertise that can pay for itself in higher returns, particularly in challenging environments.
By the way, all actively managed Vantagepoint equity funds are ahead of the S&P 500 Index year to date through August 24. (Past perfomance is not a guarantee of future results).
* This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing. Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Services, LLC by calling 1-800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240, or by visiting www.icmarc.org. Please consult both the current Vantagepoint Funds prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights and investment objectives, risks and performance information prior to investing any money. Vantagepoint securities are distributed by ICMA-RC Services LLC, a broker dealer affiliate of ICMA-RC, member NASD/SIPC. For a current prospectus, contact ICMA-RC Services LLC, 777 North Capitol Street NE, Washington, DC 20002-4240. 1-800-669-7400.