Success or Failure: The Evidence From Style-Rotating Funds
Actively managed funds tout their ability to successfully rotate across styles (such as large-caps versus small-caps and value versus growth) or sectors (industries) and thus outperform passive strategies (such as index funds). It is certainly true that investment styles do...
Style Drifting: Does It Add Value for Actively Managed Small-Cap Funds?
Investors choose mutual funds based on their investment objectives. In pursuit of said objectives, they can choose from among the broader asset classes (such as stocks and bonds) with additional, more specialized options available within each class. These decisions are...
As Investors Flee Active Funds, Will it Become Easier for Active Managers to Outperform?
One of the more frequently asked questions I receive as the director of research for The BAM ALLIANCE is whether, as investors abandon active mutual funds, it will become easier for active managers to outperform. The trend toward passive investing...
News Floating-Rate Note Funds: Too Good to Be True?
Every time interest rates are low, investors begin to make mistakes. They tend to engage in activities that they otherwise wouldn’t undertake—such as stretching for yield by taking on credit risk—if rates were at more “normal” levels like 4% or...
Is It Time to Raise Cash?
A recent article in The Wall Street Journal contained a headline that very likely frightened many investors — and in my opinion, that’s precisely what it was meant to do. Otherwise, why inform investors that “U.S. public pension plans and...
A Laundry List of Excuses for Active Managers
As sure as the sun rises in the east, at the start of each year, you’ll hear from “gurus” appearing in the financial media that this year will be a stock picker’s year. And as sure as the sun sets...
Does Firing Money Managers Lead to Improved Performance?
Leonard Kostovetsky and Jerold Warner, the authors of the study You’re Fired! New Evidence on Portfolio Manager Turnover and Performance, which was published in the August 2015 issue of the Journal of Financial and Quantitative Analysis, contribute to the literature...
Outsourcing Management: Does It Improve the Performance of Mutual Funds?
From 1980 to 2014, the percentage of American households that owned mutual funds rose from 5.7 percent to 43.4 percent. At the beginning of 1980, mutual funds held only around 4 percent of all U.S. equity. However, that figure is...
