FYI: Even after the shock of the financial crisis, managing other people’s money remained a pretty great business. While banks shed jobs, employment at the largest publicly traded asset managers rose about 20 percent from 2008 to 2015, according to data compiled by Bloomberg. Now top executives at some of the largest fund companies, including Larry Fink at BlackRock and Gregory Johnson at Franklin Resources, are warning that a reckoning is coming.
Regards,
Ted
http://www.bloomberg.com/news/articles/2016-06-23/active-managers-start-to-feel-the-pain
Comments
This is an overdo reaction that reflects the accumulating wisdom of the investing public. We learn, but only so slowly. The author of the piece captures the reason in his closing summary:
"The bottom line: Fund managers who try to beat the market mostly fail, and their business may be about to get smaller."
Here is a Link to a Morningstar study that further documents the overall failures of active fund managers:
http://corporate.morningstar.com/US/documents/ResearchPapers/MorningstarActive-PassiveBarometerJune2015.pdf
It is not a comforting performance rating, but there are a few positive findings. In a few categories, like low cost value funds, active management delivers on its promises. By picking carefully, active funds can outperform their passive counterparts. The primary reason appears to be low cost structures. That's the simple guideline for selecting an active mutual fund product that shifts the odds in the direction of active management.
Best Regards.
market that idea seemed wrong to a large extent in 2008 and then 2011 was the last straw. When active managers failed to beat the S+P in 2011 it was time to be convinced by Vanguard ads. Almost as important were taxable investors being buried by unwanted capital gains in 2014 and 2015 distribution which was followed by a move to ETFs , Full disclosure my portfolio has been affected by this trend especially when long term holding Sequoia let me down really hurting the case for active management..