Active management fails to add value, study finds
Active portfolio management fails to add value above the higher costs it imposes on investors, according to a 20-years study published by US financial advisers Harold Evensky and Shaun Pfeiffer.
According to the report, managers beat the market but not enough to pass anything on to the investor.
Those who did well during a particular market slump were unable to carry their success over to the next phase of the cycle or even later downturns.
Moreover, even if fees were half the average, according to Evensky the question of whether the manager could sustain a good performance over time would still have to be answered.
The study examined a broad universe of funds, across which it was extremely hard to find managers who could consistently added value.
While considering performance alone, actively managed funds appeared to cover their costs during times of recession, but their lack of persistence would seem to yield little advantage to investors.
The complete report can be found here.