Study showing that zero trades is the best?

August 22, 2015 7:45 AM

I remember a study of individual investor behavior, where making no trades at all gave the best return. I'm almost certain it was a Vanguard study. But I can't find it. Anyone know what I'm talking about?
posted by wnissen to Work & Money (4 answers total)

Maybe it was the Fidelity analysis showing that the best-performing clients were the ones who forgot they had accounts. That link also references some other relevant research.
posted by mbrubeck at 8:11 AM on August 22, 2015 [7 favorites]

There was another where the accounts were of people who had died, and therefore were not making trades.
posted by the man of twists and turns at 12:32 PM on August 22, 2015

Hmm. This definitely does sound like Vanguard to me - very Jack Bogle-esque!

I think, based on this blog post, that you could be thinking of Vanguard's How America Saves 2014 report. Here is the 2015 version in case you're interested.

You might also enjoy this piece on Bogle, if you haven't already see it. A snippet:

Performance by active managers is dismal, especially of late, and investors are fleeing to passively managed index funds, so Mr. Bogle is enjoying something of a told-you-so decade. Only 25% of actively managed equity mutual funds beat their benchmarks last year, the lowest rate since 1995, according to data from Morningstar. For U.S. stock funds, the beat rate was only 21%, the worst on record.
posted by schroedingersgirl at 2:33 PM on August 22, 2015

I remember something very close to what you're talking about, and I can't find the damn thing now. I think it also tracked IRAs and taxable accounts in addition to defined contribution accounts. I remember three big points were:

• People who made many transactions tended to do worse
• There was a group of people who were invested in nothing but the Vanguard health care fund, and they did consistently much better than the average (go figure)
• There was a group of people who were invested in nothing by money market funds, and they had lower returns than everyone else

And now I really want to read it again, but I think it got lost in their latest site redesign. Hm.
posted by ayerarcturus at 10:09 AM on August 23, 2015