Since 1994, Dalbar
's Quantitative Analysis of Investor Behavior (QAIB) has been measuring the
effects of investor decisions to buy, sell and switch into and out of mutual funds
over both short and long-term time frames. The results consistently show that the
average investor earns less – in many cases, much less – than mutual fund performance
reports would suggest.
The goal of QAIB is to continue to improve the performance of independent investors
on the one hand and of professional financial advisors on the other hand by incorporating
the factors that influence behaviors that determines the outcome of investment or
savings strategies. QAIB offers guidance on how and where investor behaviors can
QAIB 2013 examines real investor returns in equity,
fixed income and asset allocation funds. The analysis covers the 20-year period ending December 31, 2012,
encompassing both the drop at the turn of the millennium,
the crash of 2008 plus recovery periods of 2009, 2010 and 2012.
This year’s report discusses the advantages of asset allocation and how an asset allocator should be evaluated for effectiveness.
After conducting this year's Quantitative Analysis of Investor Behavior (QAIB), Dalbar
found that in 2012, investors experienced a less volatile and more easily navigable market. Despite this fact, it remained a market the average investor was unable to beat.
While 2012 in particular, provides a startling contrast between average investor returns
and reported Mutual Fund performance, the central findings have remained consistent: Investment
results are more dependent on investor behavior than on fund performance. Mutual
fund investors who hold on to their investments are more successful than those who t
ime the market.
To preview Highlights and the table of contents of the full study please click
- The Disease of Investor Underperformance - Since 2005, QAIB has introduced a third type of investor into the analysis; those invested in asset allocation funds. Top performing asset allocation funds may provide a solution to this underperformance.
- The Advantage of a High Quality Allocator - Choosing a top allocator makes a significant difference in the investment results one will achieve.
- Investor Returns - The bottom line: how did investor returns compare to the broad market indices?
- Risk Aversion and Inflation - A look at how extreme risk aversion can erode wealth.
- QAIB Through the Years - This section compares the average equity investor returns and buy-and-hold returns since 1998.
- Systematic Investing - This section shows the results for the average investor in equity, fixed income or asset allocation mutual funds compared with the hypothetical process of systematic investing.