The long bull market made it easier to avoid buying high and selling low. Getty Images By Ryan Ermey, Associate Editor January 30, 2020From Kiplinger’s Personal Finance There may be no more common mantra in the investing world than “buy low, sell high.” But study after study shows that investors tend to do the opposite—piling into stocks when the market is up and selling when it plummets. SEE ALSO: 11 S&P 500 Stocks That Could Soar 20% or More in 2020 But a new report from investment research firm Morningstar indicates that investors may be improving. The study tracked average annualized returns for mutual funds and exchange-traded funds for 10-year periods that ended in 2014 through 2018. It then compared the results with “investor returns,” which take into account when investors put money in and pulled money out. U.S. investor returns trailed fund returns by an annualized 0.45 percentage point, on average—a marked improvement over the 0.57 percentage point gap the researchers found two years earlier. Investors in “allocation” funds, which hold a mix of stocks and bonds, earned more than the funds themselves, indicating that the majority of investors put more money in the funds when prices were low than when prices were high. Target-date funds, which fall into this group, are likely the main reason for the category’s better performance. These funds, which invest in a mix of stocks and bonds that grows more conservative as investors near retirement, are predominantly held in workplace retirement plans, in which investors tend to hold for the long term and invest at regular intervals. Investors showed the worst timing when they invested in alternative funds—investments designed to provide returns that aren’t correlated with stock or bond markets. Those funds didn’t benefit from a general upward trend, surrendering an average 0.61% annualized return over the 10-year rolling periods. But investors fared much worse, losing 2.05%. Advertisement SEE ALSO: The 5 Best Stock Funds for Retirement Savers in 2020 Investors continue to pile into low-cost, passively managed funds, which should help them over the long term, says Sam Stovall, chief strategist at investment research firm CFRA. But the fact that investors saw worse results investing in volatile funds indicates that the shrinking “gap” could expand when markets overall get choppier. “There’s an old saying: Don’t confuse brains for a bull market,” Stovall says. Average annualized returns for the 10-year periods ending 2014-2018. Morningstar Inc.