Most advisors are familiar with the Dalbar Study which compares historical returns of mutual funds, asset allocation, and bonds to those of the average investor. It’s a cool report, but Dalbar now charges $975 for advisors to access and use the report.
Morningstar puts out a similar report and to download it for FREE, click on the following:
https://advisorshare.com/morningstar-dalbar-2024
Cash Out DSTs (a unique twist to 1031 exchanges for real estate)
Webinar—October 2nd at 1:00 PM EST
If you missed last week’s newsletter and want to sign up for this webinar to learn how clients can get cash in hand when implementing a 1031 real estate exchange, click on the following link:
https://advisorsharewm.com/cash-out-dst
The “average investor” earned 1.1% less than funds they invest in!
The Morningstar study is similar to and different than the Dalbar Study. The Dalbar Study has nice graphs, but I do like the granular and expanded detail of Morningstar’s FREE report.
The #1 metric people want to know…
-The average investor across various asset classes has earned 6.3% a year going back 10 years.
This is 1.1% less per year than the total returns the funds they invested in returned over the same period of time.
The following is a chart from the report that shows the type of investments considered, their individual investment gaps, and the overall total.
Focused Growth Strategy vs. U.S. Equities
The report uses U.S. Equities as a category, and you’ll notice the average investor returned 10% and the benchmark earned 10.8%.
Let’s compare that to my favorite “focused growth” 3rd party manager strategy. offered by our “anti-tamp,” www.advisorstamp.com.
Going back 10 years ending in 2023, the “focused growth” strategy generated a CAGR of 14.18%.
FYI, the S&P 500 has a 10-year CAGR (ending in 2023) of 11.93% (and up 25.95% 2024 YTD).
Also, FYI, the On Pointe Risk Score for the Focused Growth Strategy is 41 vs. the SPY’s 72)
To watch a recorded webinar where the manager explains how he runs the strategy to achieve better risk-adjusted returns, click on the following link:
https://advisorsharewm.com/focused-growth
Unique Numbers from the 2024 Study—Dollar Cost Averaging
In this year’s study, the numbers indicated that dollar cost averaging into the market vs. getting money in there as quick as possible did better (although it did depend on the asset class purchased). This surprised me and is different from the numbers in the 2023 study.
Is this report useful and can it be helpful to advisors?
I think the report is very interesting and can be quite useful for advisors.
Like the Dalbar Study, it reinforces that individual investors are professionals at buying and selling at the wrong times!
The report, unlike this newsletter, goes into detail as to how the numbers were derived and more detail about their conclusions.
So, hopefully this new-to-you and FREE report will be helpful to readers in their quest to gather 3rd party info to help them educate consumers with the goal of onboarding them as new clients.
