Why Active Bond Funds Bomb?

MAKE MONEY BLOG$;It’s hard for active equity funds managers to outperform their benchmarks after adjusting for risk and fees. Only about 1 in 3 managers are able to do so over a 5 year period, and it’s generally not the same managers who beat the market in the previous 5-year period.

If equity managers think they have it tough, they should try managing bond mutual funds. It’s twice as hard for bond fund managers to outperform their benchmarks because the range of returns for individual bonds is much tighter than for individual stocks, combined with higher fees, create a razor thin margin for error. Only 1 in 5 managers succeed, and not by much.

Read more about Why Active Bond Funds Bomb on my blog at www.RickFerri.com.

Source: http://blogs.forbes.com

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