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12-month periods as opposed to 50 consecutive, non-overlapping 12-month periods. One important caveat regarding the use of rolling periods is that a single extreme monthly return may be counted in many different rolling periods. Figure 9-6 charts the comparison of the performance of various equity indexes from 1928 through 2017 using this SPIE analysis. For example, the chart illustrates in the bottom left quadrant that over 1,069 1-year (12 months) monthly rolling periods, a simulated passive investor in a large growth index beat a simulated passive investor in a large value index 45% of the time, causing investors to think it might be a close call between large growth and large value. Compounded by the financial media touting the benefits of large growth companies, investors tend to believe that large growth may be a better investment. But in 841 20-year monthly rolling periods, the large value index beat the large growth index 89% of the time. Over short periods, volatility and price swings confuse investors as to which indexes are better long-term investments, but the picture becomes clearer when longer periods are considered. Figure 9-7 tracks large, small, value, blend, and growth indexes from around the world. For U.S. markets, more than 90 years of data are shown. For non-U.S. developed markets, 43 years of data is available, and there are 29 years of data for emerging markets. In each case, it is worthwhile to note the lackluster annualized returns of both large and growth indexes, relative to the strong annualized returns delivered by all of the indexes labeled small or value.

Index Funds: The 12-Step Recovery Program for Active Investors  

This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...

Index Funds: The 12-Step Recovery Program for Active Investors  

This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...