DALBAR’s annual Quantitative Analysis of Investor Behavior (QAIB) report monitors the gap between leading indicators of investment performance and what mutual fund investors actually earn. The QAIB report is often mentioned as “measuring the shortfall in retail investor real returns”.

According to the 2014 edition of QAIB, the report shows a reversal of the improvement in investor decision making, capping off the painfully slow improvement of the last three decades. The gap in 20 year returns of 10.65 percentage points in 1998 has narrowed to 4.20 in 2013. The current gap is the result of a 20 year return of 9.22% for the S&P 500 compared to the average investor return of 5.02%.

Investor returns 2013

Below shows even the shortfall in the retail investor performance for the year 2013 vs. the S&P 500 and a chart illustrating the weak performance over the pas 20 years versus asset class returns.