Last month’s article told us that index funds have low costs and the ability to closely mimic the returns of the market. They also usually outperform the returns of most actively managed funds.
The statistical proof below proves a buy and hold strategy is a good long-term bet. In other words, if you have a good hand, hold on to it! Always buy and hold, regardless of fluctuations in the market.
The market goes up more often than it goes down, and compounding-returns during good times yield a higher overall return as long as the investment is given sufficient time to mature.
A good hand starts with the cards we are holding – Those cards are Dimensional Funds.
Dimensional has 29 equity and fixed income funds that have 15+ years of performance history; 24 of which outperform their benchmark (83%). For comparison, there are 3,545 total funds in the industry sample with a 15+ year history, of which 625 outperform their benchmark (18%).
That’s why we, at AssetBuilder, take a less subjective, and more systematic approach to investing—an approach we can implement consistently. It’s an approach you can understand and stick with, even in challenging market environments.
All performance data was sourced from Morningstar Direct. The Morningstar Category identifies funds based on their actual investment styles as measured by their underlying portfolio holdings. The Morningstar Category US Fund World Bond is a very broad category and most of the funds in this category are measuring against the Citi WGBI USD and the BBgBarc Global Aggregate TR Hdg. The data query used to source the funds within a defined Morningstar category sourced only "the oldest share class ". The number of funds starting a period and ending a period is based on Morningstar's definition of "surviving investment". Dimensional Peer Group Rank was calculated based on its ranking in the peer group of funds. Past performance is no guarantee of future results.