The Historical Record on Active vs. Passive Mutual Fund Performance
18 Pages Posted: 17 Sep 2018
Date Written: September 6, 2018
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: Suggested Citation