Time to Dump Your Money Manager?

74% of stock pickers lagging behind the S&P 500.
4:59 | 06/30/14

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Transcript for Time to Dump Your Money Manager?
Yeah. Monday June 30 the New York financial markets are -- today's big -- 74%. That's the shocking percentage -- actively managed stock funds. Which are doing worse this year in the S&P 500 that according to data gathered by Morningstar reach search. And an investment firm hi everyone -- Devin Dwyer -- New York. Today here to explain how this could happen how some of these actively managed funds are doing worse. It's some of these index funds we have review -- Yahoo! finance Rick it's great to have you here so. Give us the bottom line on this how can it be that Wall Street money whizzes who manage these funds are actually doing worse. -- CBS and 500 pocket that money. Money managers are not picking the right stocks it's kind of that simple. And this goes in there -- -- investors going back decades who said. Look -- that the there's nothing special about these guys who think they can predict where the stock market is going to go -- or any. Particular stock is going to go. The index fund which just tracks the market in general let something that developed in the 1970s. Jack Bogle founder of vanguard that the mutual fund companies been. Champion of index funds ever since. And more people haven't putting money -- -- and index -- so it really is a matter of whether you believe. Your personal investment manager is Smart enough. To outperform. The stock market overall what this data shows us is that so far this year. Most money -- money managers have not been doing that. In what what's the historic trend -- for for using these personal money matters is this a fluke. So far this year the -- not even over yet but is this a fluke what would you recommend people to do with their money made sure they get it's not. It's not a fluke if you look at -- data over a period of several years you'll see that some times. The money managers do better than the market as a whole and sometimes. They don't. -- it's almost random and you know one of the things that's been going on this year is. We had a a huge run up in the stock market in 2013. It's been grinding upward more slowly this year but it has been going up and if you follow the market you keep hearing that volatility. Has been really -- Volatility is the sort of turbulence in the market. Volatility is something that stock pickers like because when when when there's a lot of turbulence in the market. There's -- there's variety in terms of the types of stock you can make gambles line. And it just hasn't been that that's sort of opportunity so far this year I did that may change a lot of people are predicting a much more turbulent market perhaps. A decline or even -- correction. Later this year nobody knows that's gonna happen of course. But what everything is kind of going exactly the same direction which has been the case there's just not. Much opportunity for stock -- to play particular stocks and that's where we've where we've been for the last six months or so it's a real quick bottom line what's your advice to. To investors right now average investors folks at home folks watching us. During this news today what should they do. You know you can't say. You should invest this way are that way it has to be either you cannot say -- just pick one of these it basically depends on what -- opinion is. Of the where the market is heading and and and the idea qualities of your money manager honestly -- -- a lot of people sort of don't like what's called passive investing. They where they just basically do as well as the market they feel like they want to get an advantage. They're -- that's that's what a more aggressive investor would do and if that share. Sort of risk tolerance -- that's the way you want to play the market do that but. I think the message for ordinary investors is there it is just not a bad thing at all to just play that the market as a whole. Rather than trying to gamble that you or your advisors somehow going to be smarter than the market. There are created by speaking of the markets the Dow's been hanging just below that 171000 mark for couple weeks now I think as you said. What's keeping it from breaking that. It's not there's been much money -- being drifting into the market but that's a lot of concern about whether stocks overvalued right now. We keep seeing them go up and a lot of investors are waiting for some kind of correction a decline in the market. You know this market's been going up steadily for more than five years I mean it's really been. An epic bull market since 2009. So people are concerned that it's getting a little -- of itself. And that is out you know holding us back from a big surge forward but. Nobody knows what's gonna happen. As you always have to say with regard to the stock market so careful. Careful investing in patience is the thing to do right now -- careful investing and patients Rick -- Yahoo! finance expert advice on this Monday morning thanks for joining and that's important thing. Can keep up with all the latest headlines right here and abcnews.com you've been watching the big number. -- Devin Dwyer in New York.

This transcript has been automatically generated and may not be 100% accurate.

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