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 be improved.
QAIB 2014 examines real investor returns in equity, fixed
income and asset allocation funds. The analysis covers from inception to the period ending December 31, 2013,
encompassing the crash of 1987, the drop at the turn of the millennium, the crash of 2008 plus recovery periods
of 2009, 2010 and 2012.
This year’s report will focus on the ways in which practices in the investment community can alter the money-losing behaviors of investors.
No matter what the state of the mutual fund industry, boom or bust: 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 try to time the market.
To preview Highlights and the table of contents of the full study please click
- Why Investors Lose Money - This section will discuss best practices to avoid money-losing behavior.
- Set Expectations Below Market Indices - Investors should set explicit and achievable expectations when investing.
- Control Exposure to Risk - The bottom line is investors should seek capital preservation.
- Monitor Risk Tolerance - Risk tolerance is not a static variable.
- Present Forecasts in Terms of Probabilities - This section will discuss how asset allocation must change continuously in order to control the exposure to risk.
- 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.