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The Market Rose But Did Portfolios Gain?



The Market Rose But Did Portfolios Gain?

There is concrete U.S. stocks positive performance in 2015. However, based on the study conducted by Dalbar American, the actual saver’s return is not really that fortunate for the investors.

During 2015, the average equity fund that investors lost is 2.3% lagging the S&P by 3.7% points. This might sound bad, but it is actually a sign of improvement in a different form. For the last 20 years, the lag was 3.52 percentage points.

Portfolio value is often highlighted and recognized as a key consideration in asset investment/divestment decisions or contract commitment business cases.  However, this value is often poorly defined and intangible, with little common understanding as to what the value actually refers to.  Even more questionable is the practice of assigning a value to portfolio impacts, which is then added to the asset valuation model output and directly used to justify investment commitments.  But below the superficial considerations, portfolio impacts are very real and warrant explicit attention.

On the other side, market value is the price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization of a publicly-traded company, and is obtained by multiplying the number of its outstanding shares by the current share price.

At this juncture, where do we put the blame? Actually, it is self –inflicted rather than we point finger to the financial services industry. It is well known that the majority of actively managed mutual funds causes the slowing of the market. But, people are still using them with a hop that they have picked the victory.

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