Why Both Sides of the Active vs. Passive Debate Are Right

By Jack Forehand (@practicalquant) —  It has become a common belief in the investing community that passive investing is superior to active management. And there is a large volume of data that supports that argument. Over time, active managers have not produced sufficient returns to justify their fees. In aggregate, finance theory tells us that active managers as a whole will produce the same gross return as the market over the long-term, and their underperformance on… Read More

Stock-Pickers Have Underperformed Benchmarks for the Past 15 Years

According to the latest S&P Indices Versus Active funds scorecard, over the last 15 years (ended December 2016) 82% of all U.S. funds were unable to beat their benchmarks, according to a recent Wall Street Journal article. This supports the growing view that active managers are unable to justify their fees and that “even those managers who do outperform their passive counterparts can’t sustain it year after year,” according to the article. Although active managers… Read More

New S&P Study: Most Fund Managers Fail to Beat Market

Add a new piece of evidence to the notion that most active fund managers fail to beat their benchmark indices over the long haul: According to recently released data from Standard & Poor’s, over the five years ending June 2008, the S&P 500 outperformed 68.6% of actively managed large cap funds; the S&P MidCap 400 outperformed 75.9% of mid-cap funds; and the S&P SmallCap 600 outperformed 77.8% of small cap funds. The data comes from… Read More