Hi Guys,
Morningstar has provided data that directly addresses the active/passive mutual fund management debate for a number of years. The Morningstar active/passive biannual reports are a challenge to active fund management because they measure the industry active performance against a passive fund management standard. In general, active management is defeated by the passive standard. Exceptions always exist. Here is a Link to the Morningstar 2016 end-of-year report:
https://corporate1.morningstar.com/ResearchLibrary/DownloadRPSpdf.aspx?url=http://rps.morningstar.com/api/v2/654566632/documents/796672/fileThese biannual reports have been very consistent over time in terms of its major findings. Active fund management has a difficult time overcoming passive fund returns in all fund categories, but there are different outcomes as a function of categories. The least expensive funds persistently outdistance their more costly equivalents. The Morningstar reports uncover no great surprises, but do summarize numbers that demonstrate what a daunting task active fund managers must overcome. And some small percentage of these managers are successful at this task.
Costs always matter greatly!
Please visit the referenced Link. It just might help you decide which segments of your portfolio should go passive management and which segments should go the active fund management route. Have fun.
Best Regards
