Every so often we begin to hear murmurs that, despite recent struggles, active managers will finally have the upper hand. After all, there has to be some justification to pay seven times as much in expenses, on average.* The reasons change, but the results have been very consistent. The Myth of a Stock-Picker’s Market takes a few of these reasons and summarily puts them to rest. It turns out that it is tough to beat the market in any year – and even harder to keep doing it.
*Sources: Investment Company Institute and Lipper
Expense ratios are measured as an asset-weighted average [for equity funds. Actively managed fixed income funds are 5.4 times as expensive using this same methodology]; figure excludes mutual funds available as investment choices in variable annuities and mutual funds that invest primarily in other mutual funds.