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Surprise: Some Active Managers Are Skilled.

TedTed
in Fund Discussions
FYI: Active fund managers are skilled and, on average, have used their skill to generate about $3.2 million per year. Large cross-sectional differences in skill persist for as long as ten years. Investors recognize this skill and reward it by investing more capital in funds managed by better managers. These funds earn higher aggregate fees, and a strong positive correlation exists between current compensation and future performance.
Regards,
Ted
http://blog.alphaarchitect.com/2015/06/19/surprise-some-active-managers-are-skilled/

Comments

  • ShostakovichShostakovich
    Thanks, Ted.

    For the board: Hasn't there been some bit of research which shows that, in fact, quite a few managers are skilled, and would actually do quite well if they stuck to their (say) top 30-50 ideas, rather than overdiversify and, further, if they kept their AUM reasonable ?
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