The year 2004 was the first in which the average U.S. equity mutual fund investor enjoyed returns that exceeded the S&P 500 index, according to a recent study released by DALBAR.

According to DALBAR, investors were able to exceed the performance of the index because they continued to invest money throughout the year, including during market downturns, unlike in earlier years during which downturns begat significant withdrawals.

While some investors still withdrew funds after downturns, these outflows were more than offset by new investments.

DALBAR says these new investments made after the S&P’s weaker months of April and July paid large dividends for investors, as they were in play during the post-U.S. election boom in November and December. This late surge was enough to push 20-year investor returns above inflation over that same period.

These findings were derived from the 2005 update to DALBAR’s Quantitative Analysis of Investor Behaviour (QAIB) study, an annual look at how investor behaviour impacts the returns they actually receive, and whether or not investors actually “buy low, sell high.”

The company will be releasing another update later this year with data relating to Canadian investors and their performance against the S&P/TSX Composite Index.