The Importance of Being Active
| 28 May 2009
Link to Article- Author: C. Thomas Howard, PhD
- Publication: Advisor Perspectives
- Publication Date: May 2009
- Intro: The average "active" US equity fund underperforms and gets worse with age. A large number of funds can survive in the face of declining performance by effectively plugging into the current style grid-based distribution system and becoming a fund distributor rather than a fund manager. Style grids constrain managers to style boxes, making it extremely difficult to remain active. On the other hand, the style grid facilitates distribution across multiple fund sales channels. Powerful industry forces destroy fund performance.