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Larry Swedroe: Active Impacts Returns & Volatility

FYI: A vast body of research provides powerful evidence of the failure of active management to generate persistent alpha (risk-adjusted outperformance).

For example, since 2002, S&P Dow Jones Indices has published its S&P Indices Versus Active (SPIVA) Scorecard, which compares the performance of actively managed equity mutual funds to their appropriate index benchmarks.

The evidence contained in its scorecards supports Charles Ellis’ observation that, while it’s possible to win the game of active management, the odds of doing so are so poor that it’s not prudent to try—which is why he called it “the loser’s game.”
Regards,
Ted
https://www.etf.com/sections/index-investor-corner/swedroe-active-impacts-returns-volatility?nopaging=1

Comments

  • Hi Guys,

    The data suggests that time in the markets is probably the biggest factor to end of period wealth. Increase the time period and the likelihood of a positive outcome increases from a 50/50 probability to a near 100% probability. Please see this reference for the data:

    https://awealthofcommonsense.com/2015/11/playing-the-probabilities/

    Of course this is only an historical data set. Things might change in the future; count on that happening. But no one knows the future, so these data are a meaningful point of departure when making investment decisions. Good luck to all.

    Best Wishes

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