Dividends An Illogical Preference

A large body of literature examines whether managers of actively managed funds add value to their investors by generating abnormal returns. Unfortunately, not only do the vast majority fail to do so, but the evidence, as presented in my book, “The Incredible Shrinking Alpha,” demonstrates that the already-small percentage of managers able to beat their benchmarks has been diminishing at a rapid pace.

Indeed, 20 years ago, approximately 20 percent of active managers were adding statistically significant alpha on a pretax basis. Today that figure is down to about 2 percent.

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