Can the Average U.S. Equity Fund Outperform the Benchmarks?

Abstract

This article compares the performance of mutual funds to appropriate benchmarks on a monthly basis over a five and a half year period. A number of interesting tendencies seem to hold regardless of capitalization or style. Small-, mid-, or large-cap funds have tended to outperform their relevant benchmark when their dominant capitalization sector has underperformed. Large-cap funds have had the highest returns but the worst performance relative to benchmarks. Just the opposite has been true for small-caps. Value outperformed growth funds relative to their benchmarks has been noticeably superior to that of value funds across all capitalization levels.