Understanding Underperformance

Is my portfolio underperforming? How can I tell if my portfolio is underperforming? Why is my portfolio underperforming?

Have you ever wondered if your portfolio was underperforming and if so, why?

While the question is valid, it’s impossible for anyone to answer it properly without first examining your overall investment approach and the benchmarks used to compare returns. First Decision To Be Made: Active Or Passive?

If you invest using an active management investment strategy, you are hoping that the manager you’ve hired can accurately identify the right securities and/or when to be in the markets at the right time. Your intent is to beat the market.

As the chart below shows, historically, the majority of active managers have had a tough time outperforming their indices.

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