This Knowledge@Wharton post makes a number of interesting points about actively managed funds.
"Our main result is strong evidence of decreasing returns at the industry level."
"As there are more mutual fund dollars out there competing with each other and looking for mispriced stocks, then there's more trading on those ideas that pushes prices, and that's going to make it harder for any mutual fund to find a mispriced stock."
"The story is that new funds entering the industry have more skill than the existing funds, possibly because of better education or a better grasp on technology. Because of the superior skill, the young funds outperform initially. They outperform their benchmarks and they also outperform the older funds."
Perhaps looking closely at young funds in a strong fund family makes some sense.
news.morningstar.com/articlenet/SubmissionsArticle.aspx?submissionid=207944.xml
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