Mind the Gap 2024 Investor Return Analysis

This technical report presents the findings of the 'Mind the Gap 2024' study, which analyzes investor returns in US mutual funds and exchange-traded funds over a ten-year period ending December 31, 2023. The report estimates that the average dollar invested earned a 6.3% annual return, which is 1.1% less than the average total return of 7.3% for the same period. The discrepancy, termed the 'gap,' is attributed to the timing of investors' purchases and sales. The study highlights that this gap was consistent across all ten years analyzed, with notable challenges for investors during turbulent market conditions in 2020. The report also compares different fund categories, revealing that allocation funds had the narrowest gap while sector equity funds experienced the widest. Additionally, it examines the impact of fund fees and volatility on investor returns, concluding that timing costs significantly affect overall performance. The findings aim to inform investors about the factors influencing their returns.