DALBAR Issues 2001 Update to 'Quantitative Analysis of Investor Behavior' Report; More Proof That Market Timing Doesn't Work for the Majority of Investors.Business Editors BOSTON--(BUSINESS WIRE)--June 21, 2001 In an updated study of cash flows into and out of mutual funds, DALBAR has reaffirmed that the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. advantage of a buy-and-hold investment strategy is extraordinary. DALBAR'S 2001 update to its "Quantitative Analysis Quantitative Analysis A security analysis that uses financial information derived from company annual reports and income statements to evaluate an investment decision. Notes: of Investor Behavior" (QAIB) study shows that, despite the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. advantage of having been un-invested in 2000 due to the decline in the equity markets, investors would still reap greater long-term returns by holding their mutual-fund investments. QAIB examines real investor returns from equity, fixed income and money market mutual funds from January 1984 through December 2000. The study was originally conducted by DALBAR, Inc. in 1994 and was the first to investigate how mutual fund investors' behavior affects the returns they actually earn. The following annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. returns for investors, whose average fund retention was 2.6 years in 2000 (down from 2.8 in 1999, but up from 1.7 after the stock-market crash in 1987), compared to corresponding indexes, clearly illustrate the benefit of buy-and-hold strategies Buy-and-hold strategy A passive investment strategy with no active buying and selling of stocks from the time the portfolio is created until the end of the investment horizon. Opposite of active strategy. : o --The average fixed-income investor realized an annualized return of 6.08%, compared to 11.83% for the long-term Government Bond Index; --The average equity-fund investor realized an annualized return of 5.32%, compared to 16.29% for the S&P 500 Index; and, --The average money-market fund money-market fund, type of mutual fund that invests in high-yielding, short-term money-market instruments, such as U.S. government securities, commercial paper, and certificates of deposit. investor realized an annualized return of 2.29%, compared to 5.82% for Treasury Bills and 71.70% for inflation. Money-market fund investors lose money after inflation. Celebrating its 25th anniversary in 2001, DALBAR, Inc., the nation's leading financial-services research firm, is committed to raising the standards of excellence in the financial-services industry. With offices in both the US and Canada, DALBAR develops standards for, and provides research, ratings, and rankings of intangible factors to the mutual fund, broker/dealer, discount brokerage A discount brokerage is a business that charges clients significantly lower fees than traditional brokerages, typically offering comparatively fewer services and/or advice. , life insurance, and banking industries. They include investor behavior, customer satisfaction, service quality, communications, Internet services, and financial-professional ratings. |
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