FYI: There is a large body of evidence demonstrating that active management is a loser’s game, including the 2008 study “The Cost of Active Investing” from Kenneth French, which showed that passively managed funds outperformed actively managed ones, and the 2010 study “Luck Versus Skill in the Cross‐Section of Mutual Fund Returns” from Eugene Fama and French, which showed there was no persistence in the outperformance of active funds beyond the randomly expected.
However, the lack of evidence regarding active managers’ ability to persistently generate alpha does not mean they lack skill. In fact, the evidence, including the 2000 study “Mutual Fund Performance: An Empirical Decomposition into Stock‐Picking Talent, Style, Transactions Costs, and Expenses” from Russ Wermers, shows that active managers generate alpha on a gross-of-fee basis, though subtract value on a net-of-fee bas
Regards,
Ted
https://www.etf.com/sections/index-investor-corner/swedroe-skill-exists-not-enough
