Three Dimensions

When discussing investments it’s a common mantra to refer to “risk and return.” Well, in the retail world most of us practice, our clients live in a three dimensional universe – risk, return and fees & taxes. A recent iShare release “Impact of Taxes and Fees on Performance” really brings this reality home. The report provided performance data showing the percentage of active managers who outperformed their respective benchmarks for the 10 year period ending 12/09. Among other results they found:

% of Active Managers Outperforming
Before Taxes & Fees After Taxes & Before Fees After Taxes & Fees
S&P 500 Blend 38% 32% 25%
S&P Small Cap 600 Blend 47% 39% 26%
Barclays Capital US Agg 35% 12% 0%
%d bloggers like this: