Monkeys Beat the S&P 500

Like usual, in 2006 the S&P 500’s performance beat more than half of large-cap actively-managed funds. To be precise, the index beat 69% of funds which is a little higher than its five-year 57% beatdown average.

While the preceding is no longer news to most informed investors, what is interesting is that despite beating more large-cap funds than usual, a whack of funds still beat the S&P. That will be a balm for active-fund fans, while non-believers will simply see it as an enticing random walk at work.


  1. From a utilitarian perspective, this serves two postitive purposes:
    First, it fuels the marketing efforts of the funds that beat the S&P, allowing them to say “Look at us!”
    This is good because good PR generates liquidity.
    Secondly, it keeps Nassim Nicholas Taleb gainfully employed on the lecture circuit, pointing out in his entertaining way “Yes, look at you. If it wasn’t you, it would have been somebody else!”
    This is good because everybody needs to hear his message, even if they don’t get it at first.

  2. hackticus says:

    What is interesting or suprising about 31% of fund manager-monkeys beating the S&P? Aside from the fact that it’s not 50%, which is what real monkeys would have achieved.

  3. Assuming that the precentage/split is on # firms, t would be interesting to see the same data measured on $ under management. It wouldn’t be a surprise to see it make the funds look even worse.

  4. Wow, those are dismal numbers! By now, this should be a well-know fact, you’d think.
    It’s amazing anyone puts any money in mutual funds. And 69% is a LOT higher than the average of 57%, if you ask me… It’s not like the S&P was torrid last year, either. Many world indexes outperformed it.
    Of course Hedge funds are just as bad if not worse!
    By now you’d think it’d be clear to investors that they are directly funding the fund managers’ Gulfstream Vs and homes in the Hamptons when they put money in actively managed funds of either kind…

  5. “what is interesting is that despite beating more large-cap funds than usual, a whack of funds still beat the S&P.”
    Umm, it’s sort of hard for everyone to be *below* average, all the time (though given fees and trading costs, it’d be possible!)