Here is an astonishing fact brought to my attention from the quant group at Merrill:

“In 2012, 39% of managers beat the S&P 500. Value and Core managers achieved 21% and 38% success rates, respectively. 54% of Growth managers outperformed the benchmark.”

38% is an unusual data point — Value did not work, Core did not work, tactical did not work — it was Growth, especially Tech, that did best to the current environment. How much of this was Apple (AAPL) related I am unsure.

Whether you want to credit (or blame) the Fed or the economy, it was an odd year. (I’ll check with Savita to see exactly how much of an outlier it actually was relative to their historical database).


Update: Over the last 10 yrs, the percentage of managers in the Merrill data that beats their benchmark is about ~48%.


A good year f or equities, so why did it feel so bad?
Savita Subramanian
Bank of America Merrill Lynch, January, 06 2013

Category: Investing, Mutual Funds

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

17 Responses to “39% of Fund Managers Beat the S&P in 2012”

  1. PeterR says:

    It felt so bad because we are losing control.

    Between Dark Pools, Black Swans, “babies” arguing in congress, the acceleration of global warming, and so forth, HAL is gaining the upper hand.

    AND everyone’s gut knows it will,just get worse.

    [See Farrell article at MarketWatch re: babies in Congress.]

  2. JimRino says:

    Apple, under Jobs, wasn’t about Just making money. Innovation was driven by imagination.

    What would the world be like if we had a Jobs at Exxon?
    We’d probably have Exxon Wind and Solar divisions, with 60% of the market.
    We wouldn’t have outrageous incompetent propaganda spending on global warming propaganda.
    We wouldn’t have a Bought Out Republican Party.

    Solar will be cheaper then ALL OTHER ENERGY Sources in 7 Years.

  3. in Praise of “overweight AAPL”.. (?)

    or, someone, once, wrote a Book about “Outlier Events”, no?


    even ‘good memes’ can go ‘bad’..

    maybe, HAL has a few too many electrons stuck in (his/her/its) Gates (yes, def., not Bill)

    “…To keep pace with our demand for ever-faster and smarter computing devices, the size of transistors is continually shrinking, allowing increasing numbers of them to be squeezed onto microchips. “The more transistors you can pack on a chip, the more powerful the chip is going to be, and the more functions the chip is going to perform,” del Alamo says.
    But as silicon transistors are reduced to the nanometer scale, the amount of current that can be produced by the devices is also shrinking, limiting their speed of operation. This has led to fears that Moore’s Law — the prediction by Intel founder Gordon Moore that the number of transistors on microchips will double every two years — could be about to come to an end, del Alamo says.
    To keep Moore’s Law alive, researchers have for some time been investigating alternatives to silicon, which could potentially produce a larger current even when operating at these smaller scales. One such material is the compound indium gallium arsenide, which is already used in fiber-optic communication and radar technologies, and is known to have extremely good electrical properties, del Alamo says. But despite recent advances in treating the material to allow it to be formed into a transistor in a similar way to silicon, nobody has yet been able to produce devices small enough to be packed in ever-greater numbers into tomorrow’s microchips.

    (worry not, Peter, Engineers, if allowed, (have found/can find) the (Problem/Issue/Answer)..

  4. “…We’d probably have Exxon Wind…”

    maybe, and fewer Flocks, definitely..

    “…But the same breezes that push the blades are the playground of hundreds of species of birds and bats, and to them, the turbines are giant horizontal blenders.

    With wind being one of the fastest-growing energy sources in the world, turbines are generating electricity along with friction between different environmental interests as advocates seek a compromise between the demand for clean renewable energy and the safety of animals. …”

  5. [...] Only 39% of active managers beat the S&P last year, "Value did not work, Core did not work, tactical did not work"  (TBP) [...]

  6. [...] impact on stock market – MarketWatch Stocks: Earnings season rolls on – CNN/Money 39% of Fund Managers Beat the S&P in 2012 – TBP Errors Mount at High-Speed Exchanges in New Year – NY Times Petition for audit of [...]

  7. JimRino says:

    You can bet that anything that takes away from oil spending will find a “scientific article” putting it under attack.

    How many birds are killed by the US Natural Gas industry waste pools all across the nation?
    What kind of environmental damages is the oil drilling industry doing, remember that little spill in the gulf that polluted the beaches of 4 southern states.

    I guess the word of the day might be: Ratio, as in 10,000 to 1 difference in environmental impact.

  8. JimRino says:

    The fracking industry is putting neurotoxins, carcinogens, arsenic and radioactive material into the environment,
    polluting your freshwater, your food supply ( beef cattle ), your milk supply ( dairy industry ), in your fracking states, they’ve bought off the state EPA so that it doesn’t release or test for pollutants.

    And you’re bring up birds?

  9. idaman says:

    @JimRino, kudos to Steve Jobs for doing what he did at Apple. But f you read Malcom Gladwell’s “Outliers” it’s clear that if Steve Jobs worked at Exxon he would have been a middle manager. All the first generation PC entraprenuers were born within 4 years of each other, and had access to advanced computing in highschool or college. If you missed that window, zero. If you moved to a different industry, zero. It’s very interesting and can be read on a crossc ountry flight.

  10. idaman says:

    I don’t get the 38-48% numbers. I always heard that 90% of fund manages failed to meet their benchmarks. Perhaps Merrill can’t be trusted as they are selling funds. Do you trust you car dealer to give you the facts?


    BR: Its likely the nature of the database they cover — specific size, length of existence, etc.

    The traditional statement is 80% of active mutual fund managers fail to meet their benchmark

  11. Jim,

    this is a decent Question..
    “…How many birds are killed by the US Natural Gas industry waste pools all across the nation?…”

    though, start here..

    also, if you’d have some links, rather than repeated/tired trope, would like to see it..

  12. Stuart Douglas says:

    So, if only 39% of fund managers beat the S&P 500, that means I beat 61% of the fund managers by having money in the S&P500.

    Whichever investment house who would like to hire, and pay me as much as these masters of the universe, I’, listening.

  13. DeDude says:

    Does that “beating” calculation include fees?

  14. [...] I referenced Merrill Lynch research that showed only 39% of fund managers beat the S&P500 last [...]

  15. [...] I referenced Merrill Lynch research that showed only 39% of fund managers beat the S&P500 last [...]

  16. [...] a fund, then you won't need to grade yourself because you are already being judged as we speak. Only 39% of active managers beat their benchmarks in 2o12, which means more than half of the fund industry is under this microscope now and the light [...]