Mutual Fund Investors Possess the Power to Succeed; They Just Need Encouragement Along the Way

2008-04-28 23:49:13 -

www.dalbar.com - For DALBAR Stephanie Ptak, 617-723-6400 The decisions mutual fund investors make are more important to their long-term success than individual fund performance, reaffirmed the 2008 version of DALBAR's annual study, Quantitative Analysis of Investor Behavior (QAIB). In fact, investor behavior can make or break performance results.

Consider these findings:

-- Over the 20 years ended December 31, 2007, the average equity fund investor earned an average of just 4.48% per year, compared with 11.81% for the S&P 500.

-- Over the same time period, the average bond fund investor actually lost 1.49% in purchasing power each year.

-- Investors who pursued a systematic, buy-and-hold strategy could have improved their performance results by 50% or more over 20 years.

"The tumultuous markets of early 2008 have put immense stress on good investment practices. We have already witnessed the tragic error of a flight from equities into money market funds at what could be the worst possible times," said Louis S. Harvey, DALBAR's president. "Controlling this ill-advised behavior is a challenge for all those who seek to act in the interest of investors," he added.

As trusted allies in the pursuit of long-term wealth, independent financial advisers and educators can play a critical role in encouraging investors to build healthy financial habits. By using visuals that put investment risk in everyday terms, and by building discussions around a few key speaking points, advisers can help counteract investors' knee-jerk behaviors, which lead to low returns. This year's QAIB includes tangible strategies that advisers and educators can use in their one-on-one interactions with clients.

For more information on QAIB 2008, please visit www.QAIB.com or call 617-723-6400.

DALBAR Research Shows How Investor Behavior Affects Returns