Advisor Flipbooks

1. Timing the market The chart below shows what can happen when investors attempt to time the market. Over the long term, investors could harm their performance, putting their goals in jeopardy. Two Potential Keys to Success: Patience and Commitment Annualized S&P 500 Index Returns ( January 2002 through December 2021) Using the S&P 500 as a proxy for the domestic equity market, and looking at a 20-year investment period, we see that: • If an investor missed just the 10 best days during this 20-year period, 44% of the gains would be lost. • If they missed the 20 best days, 73% of the gains are gone. • Missing the 30 best days would result in an almost 96% loss. • Missing the best 40 days would actually result in a negative return over the 20 year period. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate. Sources: FactSet, Annualized S&P 500 index returns from January 2002 through December 2021. For illustrative purposes only. Calculation is based on 5,036 days, excluding weekends and holidays. The returns are based on the S&P 500 Index, a market-weighted index of 500 of the largest U.S. stocks in a variety of industry sectors. It is not possible to invest directly in an unmanaged index. Index returns do not reflect any management fees, transaction costs, or expenses. Equity securities are more volatile than bonds and subject to greater risks. Small and mid-sized company stocks involve greater risks than those customarily associated with larger companies. This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. Opinions expressed are current opinions as of the date appearing in this material only. Investors who try to time the market (average equity fund investor shown below) underperform a simple, buy-and-hold strategy (S&P 500, shown below) by an overwhelming percentage. For 2021, the average equity investor in a 10-year period underperformed the market by 3.11%, and the average fixed income investor underperformed the market by 2.48%. Investor Returns vs. Market Benchmarks 10-Year Returns for 2021 Invested all , days Minus best days Minus best days Minus best days Minus best days -. . . . . . . . . . . -. . . . . . . . . . Average Equity Investor S&P Average Fixed Income Investor Bloomberg Aggregate Bond Index Source: "Dalbar 2022 QAIB Report," DALBAR, Inc. www.dalbar.com Equity benchmark performance and equity investing examples are represented by the Standard & Poor's 500 Composite Index. Bond benchmark performance and bond investing examples are represented by the Bloomberg Aggregate Bond Index, an unmanaged index of bonds generally considered representative of the bond market. Past performance cannot guarantee future results. Average stock investor and average bond investor performance results are based on a DALBAR study, "Quantitative Analysis of Investor Behavior (QAIB), 2022." DALBAR is an independent, Boston-based financial research firm. Using monthly fund data supplied by the Investment Company Institute, QAIB calculates investor returns as the change in assets after excluding sales, redemptions and exchanges. This method of calculation captures realized and unrealized capital gains, dividends, interest, trading costs, sales charges, fees, expenses and any other costs. After calculating investor returns in dollar terms, two percentages are calculated for the period examined: Total investor return rate and annualized investor return rate. Total return rate is determined by calculating the investor return dollars as a percentage of the net of the sales, redemptions, and exchanges for the period. Bloomberg ® and its indices are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited ("BISL"), the administrator of the index (collectively, "Bloomberg") and have been licensed for use. Bloomberg is not affiliated with this product or its provider, and Bloomberg does not approve, endorse, review, or recommend this product. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to this product. © SEI 2019 190682.01 (08/19)

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