GITNUX REPORT 2024

Average Return on Mutual Funds: Insights from 1971 to 2020

Unveiling the Real Numbers: What Mutual Fund Investors Need to Know About Average Returns

Author: Jannik Lindner

First published: 7/17/2024

Statistic 1

Over the past 15 years, the average actively managed mutual fund has underperformed its benchmark index by approximately 1% per year

Statistic 2

Index mutual funds outperformed 57% of actively managed funds over the 10-year period ending December 31, 2020

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Over the 15-year period ending December 31, 2020, index mutual funds outperformed 82% of actively managed large-cap funds

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Over the 10-year period ending December 31, 2020, index mutual funds outperformed 63% of actively managed small-cap funds

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Bond mutual funds returned an average of 3.52% annually over the 10-year period ending December 31, 2020

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The average return for high-yield bond mutual funds was 5.36% over the 10-year period ending December 31, 2020

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The average return for short-term bond mutual funds was 3.81% in 2020

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Balanced mutual funds (mix of stocks and bonds) returned an average of 8.22% annually over the 10-year period ending December 31, 2020

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The average return for long-term government bond mutual funds was 17.71% in 2020

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The average return for intermediate-term bond mutual funds was 7.51% in 2020

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Target-date mutual funds with a 2025 target year returned an average of 11.51% in 2020

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The average return for high-yield municipal bond mutual funds was 4.89% in 2020

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World allocation mutual funds returned an average of 7.75% in 2020

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The average return for inflation-protected bond mutual funds was 10.99% in 2020

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The average expense ratio for actively managed equity mutual funds was 0.66% in 2020

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The average expense ratio for passively managed equity mutual funds was 0.06% in 2020

Statistic 17

The average turnover ratio for actively managed equity mutual funds was 63% in 2020

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The average expense ratio for target-date mutual funds was 0.52% in 2020

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The average expense ratio for actively managed bond mutual funds was 0.48% in 2020

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The average turnover ratio for passively managed equity mutual funds was 12% in 2020

Statistic 21

The average expense ratio for international equity mutual funds was 0.89% in 2020

Statistic 22

The average expense ratio for sector-specific mutual funds was 0.94% in 2020

Statistic 23

The average expense ratio for small-cap equity mutual funds was 0.86% in 2020

Statistic 24

The average turnover ratio for small-cap equity mutual funds was 72% in 2020

Statistic 25

The average expense ratio for mid-cap equity mutual funds was 0.80% in 2020

Statistic 26

The average turnover ratio for large-cap equity mutual funds was 54% in 2020

Statistic 27

The average expense ratio for world stock mutual funds was 0.93% in 2020

Statistic 28

Large-cap stock mutual funds returned an average of 9.47% annually over the 10-year period ending December 31, 2020

Statistic 29

The average return for small-cap growth mutual funds was 13.52% in 2020

Statistic 30

Mid-cap stock mutual funds returned an average of 10.17% annually over the 10-year period ending December 31, 2020

Statistic 31

Large-cap growth mutual funds returned an average of 38.10% in 2020

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Small-cap value mutual funds returned an average of 4.63% in 2020

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Mid-cap growth mutual funds returned an average of 39.26% in 2020

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Large-cap value mutual funds returned an average of 2.91% in 2020

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Small-cap growth mutual funds returned an average of 34.82% in 2020

Statistic 36

Over the 20-year period ending December 31, 2020, large-cap value mutual funds returned an average of 6.66% annually

Statistic 37

Over the 15-year period ending December 31, 2020, small-cap growth mutual funds returned an average of 9.86% annually

Statistic 38

The average annual return for all U.S. equity mutual funds from 1971 to 2020 was 10.7%

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Over the 30-year period ending December 31, 2020, the average equity mutual fund returned 10.12% annually

Statistic 40

Over the 30-year period ending December 31, 2020, the average bond mutual fund returned 5.22% annually

Statistic 41

International equity mutual funds had an average annual return of 7.59% over the 10-year period ending December 31, 2020

Statistic 42

The average return for emerging market equity mutual funds was 18.31% in 2020

Statistic 43

Over the 20-year period ending December 31, 2020, international equity mutual funds returned an average of 5.92% annually

Statistic 44

The average return for emerging market bond mutual funds was 6.45% over the 10-year period ending December 31, 2020

Statistic 45

International small/mid-cap equity mutual funds returned an average of 12.05% in 2020

Statistic 46

International large-cap equity mutual funds returned an average of 10.65% in 2020

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Diversified emerging markets equity mutual funds returned an average of 19.30% in 2020

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Value-oriented mutual funds returned an average of 2.63% in 2020

Statistic 49

Growth-oriented mutual funds returned an average of 34.77% in 2020

Statistic 50

Over the 20-year period ending December 31, 2020, the average equity mutual fund investor earned an annualized return of 5.96%

Statistic 51

Over the 15-year period ending December 31, 2020, the average equity mutual fund investor earned an annualized return of 6.75%

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Over the 10-year period ending December 31, 2020, the average equity mutual fund investor earned an annualized return of 9.68%

Statistic 53

Over the 20-year period ending December 31, 2020, the average balanced mutual fund investor earned an annualized return of 4.79%

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Over the 15-year period ending December 31, 2020, the average fixed income mutual fund investor earned an annualized return of 3.33%

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Over the 10-year period ending December 31, 2020, the average allocation mutual fund investor earned an annualized return of 6.48%

Statistic 56

The average return for technology sector mutual funds was 55.91% in 2020

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The average return for real estate mutual funds was -2.32% in 2020

Statistic 58

The average return for energy sector mutual funds was -27.27% in 2020

Statistic 59

The average return for healthcare sector mutual funds was 23.24% in 2020

Statistic 60

The average return for consumer cyclical sector mutual funds was 42.82% in 2020

Statistic 61

The average return for utilities sector mutual funds was 0.61% in 2020

Statistic 62

The average return for natural resources sector mutual funds was 0.44% in 2020

Statistic 63

The average return for communications sector mutual funds was 22.37% in 2020

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Summary

  • The average annual return for all U.S. equity mutual funds from 1971 to 2020 was 10.7%
  • Over the past 15 years, the average actively managed mutual fund has underperformed its benchmark index by approximately 1% per year
  • Large-cap stock mutual funds returned an average of 9.47% annually over the 10-year period ending December 31, 2020
  • The average expense ratio for actively managed equity mutual funds was 0.66% in 2020
  • International equity mutual funds had an average annual return of 7.59% over the 10-year period ending December 31, 2020
  • Bond mutual funds returned an average of 3.52% annually over the 10-year period ending December 31, 2020
  • The average return for small-cap growth mutual funds was 13.52% in 2020
  • Over the 20-year period ending December 31, 2020, the average equity mutual fund investor earned an annualized return of 5.96%
  • The average return for technology sector mutual funds was 55.91% in 2020
  • The average expense ratio for passively managed equity mutual funds was 0.06% in 2020
  • Mid-cap stock mutual funds returned an average of 10.17% annually over the 10-year period ending December 31, 2020
  • The average return for emerging market equity mutual funds was 18.31% in 2020
  • Over the 30-year period ending December 31, 2020, the average equity mutual fund returned 10.12% annually
  • The average turnover ratio for actively managed equity mutual funds was 63% in 2020
  • Value-oriented mutual funds returned an average of 2.63% in 2020

Mutual funds: the good, the bad, and the witty. Picture this – over the past few decades, the average annual return for U.S. equity mutual funds has danced around like a fickle investor, hitting highs, lows, and even a couple of mehs. Buckle up as we delve into a rollercoaster ride of statistics revealing how these funds have performed, underperformed, and sometimes left us scratching our heads. So, grab your coffee, get cozy, and lets navigate the world of mutual funds with a dash of humor and a sprinkle of financial wisdom.

Active vs. Passive Management

  • Over the past 15 years, the average actively managed mutual fund has underperformed its benchmark index by approximately 1% per year
  • Index mutual funds outperformed 57% of actively managed funds over the 10-year period ending December 31, 2020
  • Over the 15-year period ending December 31, 2020, index mutual funds outperformed 82% of actively managed large-cap funds
  • Over the 10-year period ending December 31, 2020, index mutual funds outperformed 63% of actively managed small-cap funds

Interpretation

Despite the relentless efforts of actively managed mutual funds to beat the market, the data speaks for itself: they continue to stumble behind their benchmark indexes like a marathon runner wearing roller skates. It seems that the old adage of "don't just stand there, do something" may need a slight adjustment in the world of investing – "don't just do something, stand with the index funds." With index funds outperforming the majority of actively managed funds across different time frames, perhaps it's time for investors to embrace the power of passive investing and let the market do the heavy lifting. After all, why put in the effort to beat the market when you can simply join it and enjoy the ride?

Asset Class Performance

  • Bond mutual funds returned an average of 3.52% annually over the 10-year period ending December 31, 2020
  • The average return for high-yield bond mutual funds was 5.36% over the 10-year period ending December 31, 2020
  • The average return for short-term bond mutual funds was 3.81% in 2020
  • Balanced mutual funds (mix of stocks and bonds) returned an average of 8.22% annually over the 10-year period ending December 31, 2020
  • The average return for long-term government bond mutual funds was 17.71% in 2020
  • The average return for intermediate-term bond mutual funds was 7.51% in 2020
  • Target-date mutual funds with a 2025 target year returned an average of 11.51% in 2020
  • The average return for high-yield municipal bond mutual funds was 4.89% in 2020
  • World allocation mutual funds returned an average of 7.75% in 2020
  • The average return for inflation-protected bond mutual funds was 10.99% in 2020

Interpretation

In a financial world where numbers speak louder than words, the average return on mutual funds in 2020 tells a tale of diverse outcomes. Whether you're playing the long game with government bonds or navigating the high-risk waters of high-yield options, the numbers paint a mosaic of possibilities. From the modest yet steady gains of short-term bonds to the lofty returns of long-term government options, each category offers its own flavor of financial adventure. In a world of uncertainty, these figures stand as both signposts and siren calls to investors, beckoning them to navigate the tumultuous seas of mutual fund investing with a blend of caution and calculated risk-taking.

Fund Expenses

  • The average expense ratio for actively managed equity mutual funds was 0.66% in 2020
  • The average expense ratio for passively managed equity mutual funds was 0.06% in 2020
  • The average turnover ratio for actively managed equity mutual funds was 63% in 2020
  • The average expense ratio for target-date mutual funds was 0.52% in 2020
  • The average expense ratio for actively managed bond mutual funds was 0.48% in 2020
  • The average turnover ratio for passively managed equity mutual funds was 12% in 2020
  • The average expense ratio for international equity mutual funds was 0.89% in 2020
  • The average expense ratio for sector-specific mutual funds was 0.94% in 2020
  • The average expense ratio for small-cap equity mutual funds was 0.86% in 2020
  • The average turnover ratio for small-cap equity mutual funds was 72% in 2020
  • The average expense ratio for mid-cap equity mutual funds was 0.80% in 2020
  • The average turnover ratio for large-cap equity mutual funds was 54% in 2020
  • The average expense ratio for world stock mutual funds was 0.93% in 2020

Interpretation

In the world of mutual funds, it seems the only thing reaching new heights is the average expense ratio! With actively managed funds playing a costly game at 0.66%, while passively managed funds are the frugal winners at 0.06%, investors might want to consider their financial fitness plan. And let's not forget the high turnover ratios resembling a whirlwind romance for some funds in 2020. As the numbers dance across the board, one thing is clear - keep your eyes on the fees or risk getting a financial hangover as you navigate the mutual fund mosh pit.

Fund Size and Performance

  • Large-cap stock mutual funds returned an average of 9.47% annually over the 10-year period ending December 31, 2020
  • The average return for small-cap growth mutual funds was 13.52% in 2020
  • Mid-cap stock mutual funds returned an average of 10.17% annually over the 10-year period ending December 31, 2020
  • Large-cap growth mutual funds returned an average of 38.10% in 2020
  • Small-cap value mutual funds returned an average of 4.63% in 2020
  • Mid-cap growth mutual funds returned an average of 39.26% in 2020
  • Large-cap value mutual funds returned an average of 2.91% in 2020
  • Small-cap growth mutual funds returned an average of 34.82% in 2020
  • Over the 20-year period ending December 31, 2020, large-cap value mutual funds returned an average of 6.66% annually
  • Over the 15-year period ending December 31, 2020, small-cap growth mutual funds returned an average of 9.86% annually

Interpretation

In the world of mutual funds, returns can be as varied as a box of chocolates – you never quite know what you're going to get. With large-caps strutting their stuff at a respectable 9.47% annually over the past decade but small-cap growth funds stealing the show in 2020 with a dazzling 13.52% return, it's clear that in the investment game, there's no shortage of surprises. Just when you think you have the market figured out, along comes a 38.10% return from large-cap growth funds to keep us all on our toes. So, buckle up, dear investors – the rollercoaster ride of returns awaits, complete with loops, twists, and the occasional wild ride of mid-cap growth funds hitting a remarkable 39.26% in 2020. Keep your eyes on the numbers, and your sense of humor intact – it's a bumpy but thrilling financial journey ahead.

Historical Performance

  • The average annual return for all U.S. equity mutual funds from 1971 to 2020 was 10.7%
  • Over the 30-year period ending December 31, 2020, the average equity mutual fund returned 10.12% annually
  • Over the 30-year period ending December 31, 2020, the average bond mutual fund returned 5.22% annually

Interpretation

The numbers speak loud and clear – while U.S. equity mutual funds have been trotting along at a respectable 10.7% clip for nearly half a century, the prudent cousin, bond mutual funds, have been taking a more leisurely stroll at 5.22%. It's a tale of two strategies: the adrenaline-fueled rollercoaster ride of equities versus the steady, dependable path of bonds. It's a classic case of "slow and steady wins the race" versus "go big or go home." Whichever you choose, just keep in mind that in the world of investing, there are no shortcuts, only smart decisions and perseverance.

International vs. Domestic Funds

  • International equity mutual funds had an average annual return of 7.59% over the 10-year period ending December 31, 2020
  • The average return for emerging market equity mutual funds was 18.31% in 2020
  • Over the 20-year period ending December 31, 2020, international equity mutual funds returned an average of 5.92% annually
  • The average return for emerging market bond mutual funds was 6.45% over the 10-year period ending December 31, 2020
  • International small/mid-cap equity mutual funds returned an average of 12.05% in 2020
  • International large-cap equity mutual funds returned an average of 10.65% in 2020
  • Diversified emerging markets equity mutual funds returned an average of 19.30% in 2020

Interpretation

In the world of mutual funds, the numbers dance like stock market tickers on a busy day. From the impressive 18.31% return of emerging market equity funds in 2020 to the steady 7.59% average return on international equity funds over the past decade, investors are treated to a veritable buffet of options. With the diversification of portfolios and the rollercoaster of market forces, these statistics serve as a snapshot of the financial landscape, reminding us that while there's no crystal ball for predicting returns, a diversified approach and a sprinkle of patience might just yield some fruitful results.

Investment Style Performance

  • Value-oriented mutual funds returned an average of 2.63% in 2020
  • Growth-oriented mutual funds returned an average of 34.77% in 2020

Interpretation

In the mutual funds race of 2020, value-oriented funds seem to have been strolling leisurely, sipping their coffee at 2.63%, while growth-oriented funds were sprinting like Usain Bolt at 34.77%. It's like comparing a cozy Sunday drive to a high-speed chase - both have their place, but one clearly grabbed the spotlight last year. Investors must now decide if they want to roll down the window and enjoy the steady breeze with value funds or buckle up for the adrenaline rush with growth funds in the next financial lap.

Investor Behavior

  • Over the 20-year period ending December 31, 2020, the average equity mutual fund investor earned an annualized return of 5.96%
  • Over the 15-year period ending December 31, 2020, the average equity mutual fund investor earned an annualized return of 6.75%
  • Over the 10-year period ending December 31, 2020, the average equity mutual fund investor earned an annualized return of 9.68%
  • Over the 20-year period ending December 31, 2020, the average balanced mutual fund investor earned an annualized return of 4.79%
  • Over the 15-year period ending December 31, 2020, the average fixed income mutual fund investor earned an annualized return of 3.33%
  • Over the 10-year period ending December 31, 2020, the average allocation mutual fund investor earned an annualized return of 6.48%

Interpretation

In a financial world that’s as unpredictable as a cat on a skateboard, these numbers paint a picture of investor success in a market that’s full of ups, downs, and loop-de-loops. While some may see these returns as mere numbers on a page, others see them as a rollercoaster ride of financial triumphs and pitfalls. From the steady ship of fixed income to the wild rides of equity and balanced funds, these statistics serve as a colorful tapestry of the investment landscape – where the only certainty is uncertainty, and the only way to navigate is with a healthy mix of strategy, luck, and maybe a dash of magic.

Sector-Specific Performance

  • The average return for technology sector mutual funds was 55.91% in 2020
  • The average return for real estate mutual funds was -2.32% in 2020
  • The average return for energy sector mutual funds was -27.27% in 2020
  • The average return for healthcare sector mutual funds was 23.24% in 2020
  • The average return for consumer cyclical sector mutual funds was 42.82% in 2020
  • The average return for utilities sector mutual funds was 0.61% in 2020
  • The average return for natural resources sector mutual funds was 0.44% in 2020
  • The average return for communications sector mutual funds was 22.37% in 2020

Interpretation

In the tumultuous financial landscape of 2020, mutual funds across various sectors saw a rollercoaster of returns, leaving investors dizzy with excitement or perhaps a touch of nausea. Technology sector funds sprinted ahead like a thoroughbred at 55.91%, while real estate funds seemed to stumble in the mud at -2.32%. Energy sector funds found themselves stuck in a downward spiral at -27.27%, in stark contrast to the healthy gains made by healthcare and consumer cyclical sector funds. Like a game of financial whack-a-mole, investors navigated through the ups and downs, finding solace in the humble but steady returns of utilities and natural resources sector funds. Meanwhile, the communications sector sailed smoothly at 22.37%, proving that in the tumultuous seas of investment, a diversified portfolio might just be the best lifeboat.

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