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Are You Better Than Average?

In a study done by the New York Times last June, they found that 83% of subscribers believe they are above average, 16% believe they are average and less than .5% believe they are below average. Most people (not just subscribers to the New York Times) believe they are above average in most aspects of their lives. Driving ability, intelligence, cooking, and so on. And, of course, that’s impossible. “Average” means just that. Right in the middle so 50% of a group has to be above the group’s average and 50% must be below the average.

So would it surprise you to know that most actively managed mutual fund managers also think they are above average? Yet, the statistics show that only about 20% of actively managed mutual funds beat their index (the “average”) in a given year. Approximately 80% are below average.

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