Active Management in Mostly Efficient Markets
Posted: 20 Oct 2011
Date Written: September 1, 2011
This survey of the academic literature on the value of active management shows that the average active manager does not outperform, but that a significant minority of active managers do add value. Further, academic studies suggest that investors may be able to identify superior active managers (SAMs), in advance, by using public information. Investors who can identify SAMs should be able to improve their overall Sharpe ratio by including a meaningful exposure to active strategies.
Keywords: mutual funds, active management, performance evaluation
JEL Classification: G14, G23
Suggested Citation: Suggested Citation