Active Managers Are Skilled
Posted: 10 Jun 2015
Date Written: June 9, 2015
Active fund managers are skilled and, on average, have used their skill to generate about $3.2 million per year. Large cross-sectional differences in skill persist for as long as ten years. Investors recognize this skill and reward it by investing more capital in funds managed by better managers. These funds earn higher aggregate fees, and a strong positive correlation exists between current compensation and future performance.
Keywords: Managerial Skill Mutual Fund Performance
JEL Classification: G23, G20, G11, J31
Suggested Citation: Suggested Citation