Ok, so IUL's have gotten my attention ...

[Allen Trent]

What percentage of mutual funds outperform any index?

Are you asking about an actual market index or are talking about an IUL index segment or an IUL index account value after policy fees & cost of insurance charges?

 

[scagnt83]

What percentage of mutual funds outperform any index?

You mean outperform their benchmark index. Lots of mutual funds outperform lots of various indexes. But statistically, over the past 20 years, around 40% of mutual funds outperformed their benchmark index.

History is a very good indicator of a funds performance vs. its benchmark. Most any decent brokerage platform provides ratings and statistics from morningstar or some other fund monitoring service. Its not hard to find the well performing funds if you use the right tool for the job.

 

[jboussea]

What percentage of mutual funds outperform any index?

Let me start by saying I'm not securities licensed

i think we're assuming that "outperforming" means return ...but some fund objectives might be low volatility .. so if that's the objective the funds are not expected to outperform their benchmark index in terms of returns... correct?

 

[scagnt83]

Let me start by saying I'm not securities licensed

i think we're assuming that "outperforming" means return ...but some fund objectives might be low volatility .. so if that's the objective the funds are not expected to outperform their benchmark index in terms of returns... correct?

Yes to the first question. 98% No to the second.

We are talking about outperforming based on return.

But a "Benchmark Index" is supposed to represent a similar risk/sector as the Fund.

So a large cap fund with mostly non-specific US holdings would likely use the S&P 500 for it's Benchmark. If it was specific towards a certain sector in the US, then it's Benchmark might be different.

But a lower risk fund would never use the S&P 500 for it's Benchmark. It would use an Index that represents the fund's risk profile. Perhaps a Bond Index or even an aggregate index.

That being said, sometimes it's hard to find an Index that accurately represents a Mutual Funds exact risk/return profile and overall makeup. But for most Mutual Funds out there, there is an Index that is close in nature to use as a Benchmark.

Long story short, a Benchmark Index is meant to replicate the risk/return profile of the Fund. And it can be any Index, publicly traded or not.