DALBAR Study

The DALBAR Study is one of the best studies to come out every year and is one EVERY advisor should download, read, and use with clients.

Click here to download the 2014 DALBAR Study.

*The 2015 DALBAR Study should be out in May.

What’s new for 2014 DALBAR Study?

For the first time, the DALBAR Study has incorporated drawdown risk in its study. This is a very exciting addition to the study that dovetails with Roccy DeFrancesco’s 53-page investment risk White Paper.

Not surprising with a good 2013, the number of the average investor going back 20 years has increased; but they are still pathetic.

The “average investor” over the last 20 years earned a return of 5.02% while the S&P 500 earned 9.21%.

What’s even more interesting is that one of the low maximum drawdown strategies at the RIA we recommend advisors work with (http://www.pomplanning.net) has averaged over 9.00% net of fees over the same 20-year period with 75% less volatility than the S&P 500.

Explaining the DALBAR Study

The official title to the report is: “Quantitative Analysis of Investor Behavior.” The report has in it the following information:

1) What the return of the S&P 500 stock index has been over the last 20-, 10-, 5-, and 1-year time frames.

2) What the “average investor” returned over the same time frames.

3) What inflation has been each year for the last 20 years.

4) Annual investor returns by fund type vs. inflation.

5) What benchmark bond returns have averaged over the last 20-, 10-, 5-, and 1-year time frames.

6) Investor retention data (how long are mutual funds and bonds held for before selling (this number is shocking)).

7) The report compares how investors with different types of investment philosophies (like an asset allocation fund) would have done over the last 20 years.

Whether you are an insurance agent, financial planner, RIA, etc., this is a report you must read and use to educate your clients.