Selling Hope

2 Pages Posted: 18 Sep 2012 Last revised: 11 Aug 2013

See all articles by Jason C. Hsu

Jason C. Hsu

Research Affiliates; Rayliant Global Advisors; University of California, Los Angeles - Anderson School of Business

Date Written: September 17, 2012


Numerous studies show that most active managers fail to deliver alpha over time, net of fees; yet investors continue to pay high fees for active management. This article asks why investors persist in such seemingly irrational behavior. As long as active managers can keep on charging high fees, they will do so. Investment managers are fond of telling clients that “hope is not a strategy”; ironically, however, selling hope has turned out to be a fantastic strategy for investment managers. It may benefit investors to think twice about how much they want to pay for hope.

Keywords: Active Management, Hedge Funds, Index Funds, Irrational Investor Behavior, Mutual Funds, Pension Fund

Suggested Citation

Hsu, Jason C. and Hsu, Jason C., Selling Hope (September 17, 2012). Rotman International Journal of Pension Management, Vol. 5, No. 2, 2012, Available at SSRN: or

Jason C. Hsu (Contact Author)

Research Affiliates ( email )

620 Newport Center Dr
Suite 900
Newport Beach, CA 92660
United States


Rayliant Global Advisors ( email )

Hong Kong

University of California, Los Angeles - Anderson School of Business

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

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