In my experience there are a lot of intelligent investors who would be wiser after reading this short article. The key point made by the writer-- "Because active and passive returns are equal before cost, and because active managers bear greater costs, it follows that the after-cost return from active management must be lower than that from passive management"-- is well-supported by data. A little more than ten years ago there was another article titled "The Difficulty of Selecting Superior Mutual Fund Performance" which was printed in the Journal of Financial Planning (February 2006, by Thomas P. McGuigan) and showed that the majority of actively-managed funds failed to yield returns which beat the relevant indicies, especially when the horizon was 20+ years. If others have written similar studies more recently, I'd like to read them, but I didn't find anything with the same depth when I searched.
Submitted February 16, 2017 at 01:21PM by busyroad94 http://ift.tt/2kWXo7G
