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Sometimes (in the past active management beat passive
From an article on Barron s website "From 1962 through 1981, the median actively managed fund returned nearly 70 percentage points more than the S&P 500 over those 20 years. Unfortunately, the good times didn’t last: From June 1983 to June 2014, the median fund underperformed the market by more than 80 percentage points."
The author indicates that active outperforms more often in a rising interest enviornment
I suspect that one major factor contributing to active managers lackluster performance most recently is the changing competitive environment.
In times past, the managers were mostly trading against amateurs, the general public. Today, over 70 % of the trading is done against other professionals. Any advantages are Neutralized by smart pro going against equally smart pro. Their operational and research costs promote underperformance when measured against Index products.
But long-term active fund exceptions exist. You and many MFOers know them.
@JohnChisum Ya !!! I've been wondering if the algos are actually reset and/or changed when markets move in a given % change. When will, or are the machines back in the game at this time. One can imagine a human trader having worked many years are "mega firm A" wanting to place their human trade(s) and management blocks the activity; 'cause the algo machine indicate that the time has not yet arrived. Take care, Catch
Even I (a beginner) in bridge beat the bridge robots programed to be "perfect play" GOOD managers have something no machine has, market knowledge and a feeling for what is GOING to happen...try to program that...
Comments
Regards,
Ted
The title of the Barron's article is " A Glimmer of Hope for Active Fund Managers". Here is a Link to it:
http://online.barrons.com/articles/a-glimmer-of-hope-for-active-fund-managers-1418437745
I suspect that one major factor contributing to active managers lackluster performance most recently is the changing competitive environment.
In times past, the managers were mostly trading against amateurs, the general public. Today, over 70 % of the trading is done against other professionals. Any advantages are Neutralized by smart pro going against equally smart pro. Their operational and research costs promote underperformance when measured against Index products.
But long-term active fund exceptions exist. You and many MFOers know them.
Best Holiday. Wishes.
Ya !!! I've been wondering if the algos are actually reset and/or changed when markets move in a given % change. When will, or are the machines back in the game at this time.
One can imagine a human trader having worked many years are "mega firm A" wanting to place their human trade(s) and management blocks the activity; 'cause the algo machine indicate that the time has not yet arrived.
Take care,
Catch
GOOD managers have something no machine has, market knowledge and a feeling for what is GOING to happen...try to program that...