The Historical Record on Active vs. Passive Mutual Fund Performance

27 Pages Posted: 13 Sep 2018 Last revised: 9 Dec 2019

See all articles by David Nanigian

David Nanigian

California State University, Fullerton - Department of Finance

Date Written: March 1, 2019

Abstract

This study examines the risk-adjusted performance of actively managed mutual funds vs. passively managed mutual funds between 1991 and 2018 and finds that the statistical significance of the difference in performance between the two types of funds disappears when the passively managed funds are compared to competitively priced actively managed funds. The practical implication of this study is that, setting tax considerations aside, as long as investors are cost conscious in their fund selection process, investing in passively managed funds does not meaningfully improve investor outcomes.

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 (March 1, 2019). 2019 Academic Research Colloquium for Financial Planning and Related Disciplines. Available at SSRN: https://ssrn.com/abstract=3248056 or http://dx.doi.org/10.2139/ssrn.3248056

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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