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Expand chart
Data: S&P Dow Jones Indices; Chart: Axios Visuals

Not all investors are trying to beat the market. According to S&P Dow Jones Indices, a record $5.4 trillion was parked in funds that passively track the S&P 500 at the end of 2020.

Why it matters: There’s plenty of data that shows most individual investors, and even professional money managers, can’t beat the S&P 500 by actively managing their stock portfolios.

By the numbers: At the end of 2008 during the financial crisis, there was just $915 billion worth of assets indexed to the S&P 500. The S&P closed at 903 that year.

  • As passive investing has become increasingly popular, assets indexed to the S&P nearly sextupled (+493%) to $5.4 trillion in 2020 as the index itself quadrupled (+316%) to 3,756.
  • About 60% of large-cap equity fund managers underperformed the S&P 500 in 2020, according to a separate report from S&P Dow Jones Indices.
  • This was the 11th straight year that a majority of these professional stock pickers lagged that benchmark.

Yes but: The active fund management business is alive and well.

  • Just over $8 trillion in actively managed funds use the S&P 500 as their benchmark for performance.

State of play: Even the pros who perform well in a given year are rarely able to stay on top.

  • S&P Dow Jones Indices found that of active large-cap equity fund managers in the top-performing half of their peer group in 2016, just 23% remained in the top in 2017. Only 10.5% repeated the feat three years in a row.
  • And just 4.2% of active large-cap equity fund managers were able to stay in the top half for five consecutive years through 2020.

The bottom line: While historical odds favor investors who only aim to match the performance of the S&P 500, the allure of beating the market will continue to have investors wagering trillions.

Editor's note: This post has been corrected to say that the assets indexed to the S&P 500 sextupled and the index itself quadrupled from 2008 to 2020 (not quintupled and tripled).

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The largest LBO financing since the financial crisis is coming to a debt market near you. A bevy of banks made their initial pitch this week to sell investors part of a $15 billion loan backing the $34 billion buyout of medical supplies company Medline Industries.

What's new: A banking group led by JPMorgan and Goldman Sachs asked a select group of high yield fund managers to buy a piece of the Medline debt commitment known as a "bridge loan," sources tell Axios. Investors were asked to make their decisions by Wednesday.

Stock buybacks boom as corporate cash piles grow

The Delta variant is keeping more companies cautious about how to invest the mountains of cash they have at their disposal. That hesitancy has led, in part, to corporate spending on stock buybacks outpacing capital expenditures this year. 

Why it matters: Companies hoarded cash and raised prices over the past year — leaving them with a lot of money and decisions about what to do with it.

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Democrats are at a pivotal moment in their quest to expand health care coverage, slash the cost of prescription drugs and create a social structure that prioritizes people's health.

Driving the news: Democrats have a clear list of health care priorities they'll be fighting for this week. Among them is a measure to expand Medicare to cover dental, vision and hearing benefits.