The Historical Record on Active vs. Passive Mutual Fund Performance

18 Pages Posted: 17 Sep 2018

See all articles by David Nanigian

David Nanigian

California State University, Fullerton - Department of Finance

Date Written: September 6, 2018

Abstract

This study examines the historical record on the risk-adjusted performance of actively managed mutual funds vs. passively managed mutual funds and does not find any statistically distinguishable difference between the performance of actively managed funds and passively managed funds. While not statistically significant, the difference in performance between the two types of funds becomes economically meaningless when the passively managed funds are compared to competitively priced actively managed funds. The practical implication of this study is that as long as investors are cost conscious in their fund selection process, the active vs. passive choice is a moot point.

Keywords: Passive investing, Index funds, Actively managed funds, Mutual fund performance, Mutual fund fees, Mutual fund industry competition

JEL Classification: G11, G23

Suggested Citation

Nanigian, David, The Historical Record on Active vs. Passive Mutual Fund Performance (September 6, 2018). Available at SSRN: https://ssrn.com/abstract=3246151 or http://dx.doi.org/10.2139/ssrn.3246151

David Nanigian (Contact Author)

California State University, Fullerton - Department of Finance ( email )

PO Box 34080
Fullerton, CA 92834-9480
United States

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