Download This PaperIs it Better to be Active or Passive Manger? Evidence from the Dow Jones Industrial Average
EuroJournals Publishing, Issue 90 (2012)
9 Pages Posted: 4 Jun 2020
Date Written: April 12, 2012
Abstract
This paper compares between the performance of an active manger that tries to beat the market and constructs an optimal risky portfolio of companies that are listed in the Dow Jones Industrial Average (DJIA), and the performance of a passive manger that creates a portfolio similar to the DJIA. We followed the methodology of Markowitz in building the efficient frontier. Our findings advocate the passive investment strategy which does not attempt to outperform the market; i.e., being a passive manger is better than being an active manger.
Keywords: Efficient Frontier, Dow Jones Industrial Average, Sharpe Ratio, Active Manger, Passive Manger, Short Selling
JEL Classification: G11, G12, G19
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