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D
 ALBAR
The Measurement of Success
 © 
2008 D
ALBAR 
, Inc.D
ALBAR 
, Inc.Phone: 617-723-6400Federal Reserve Plaza600 Atlantic AvenueBoston, MA 02210www.dalbar.com
Compliments of Russ ThorntonThornton Wealth Management
QAIB 2008Advisor Edition
Extract of 
Quantitative Analysis of Investor Behavior 2008
© 
What investors really do ... and how to counteract it.
 
QAIB 2008
 © 
2008 D
ALBAR 
, Inc.D
ALBAR 
, Inc.
Phone: 617-723-6400Federal Reserve Plaza600 Atlantic Avenue2Boston, MA 02210www.dalbar.com
Compliments of Russ Thornton
Past performance is no guarantee of future results.
Introduction & Background
D
ALBAR
's Quantitative Analysis of Investor Behavior (QAIB) has beenmeasuring the effects of investor decisions to buy, sell, and switch intoand out of mutual funds since 1984. The results have shown, to varyingdegrees, that the average investor earns significantly less than mutualfund performance reports suggest.The goal of the QAIB study is to educate investors and the professionalswho advise them about the effects of investor behavior on the realfinancial outcomes of an investment program.QAIB 2008 examines real investor returns for equity, fixed income, andasset allocation funds for the 20 years ended December 31, 2007. Whetherthe mutual fund industry is enjoying rapid expansion in times of economicboom, or is being battered by the bears, the key findings uncovered inD
ALBAR
's first study from 1994 remain true:
Investment return is farmore dependent on investor behavior than on fund performance.Mutual fund investors who hold their investments typically earnhigher returns over time than those who time the market.
 
QAIB 2008
 © 
2008 D
ALBAR 
, Inc.D
ALBAR 
, Inc.
Phone: 617-723-6400Federal Reserve Plaza600 Atlantic Avenue3Boston, MA 02210www.dalbar.com
Compliments of Russ Thornton
Past performance is no guarantee of future results.
The Reality of Investor Returns
For years, mutual fund companies have been marketing their productsusing the long-term results of a lump-sum investment. The resultstypically show that the funds' annualized returns have outpaced theirdesignated benchmarks and inflation, implying that if investors purchasefund shares and hold them for similar time periods, they may achievesimilar results.Reality, however, is quite different from this scenario - and it's not thefault of the fund companies. Based on an analysis of actual investorbehavior over the 20 years ended December 31, 2007, the average equityfund investor would have earned an annualized return of just 4.48% --underperforming the S&P 500 by more than 7% and outpacing inflation bya mere 1.44%. Fixed income investors would have fared far worse, losingtheir purchasing power by an average of 1.49% per year. Asset allocationfund investors would have done a bit better, beating inflation by 0.41%per year. Over shorter time periods, the results were far better for equityfund investors.
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