A pointed debate broke out over the issue of Active vs. Passive management in Advisor Perspectives, and Dr. Howard was right in the middle of it.

Article 1: Luck versus Skill in Active Mutual Funds

• Author: Robert Huebescher
• Publication: Advisor Perspectives
• Publication Date: August 5, 2008
• Intro: A recurring question in the topic of active versus passive management is the degree to which active mutual fund managers who outperform their benchmark can be considered to have done so through skill versus luck.

Article 2: Letter to the Editor - Luck versus Skill in Active Mutual Funds

• Author: C. Thomas Howard, Ph.D
• Publication: Advisor Perspectives
• Publication Date: August 12, 2008
• Intro: Contrary to the findings of the study we wrote about last week, Tom Howard provides data showing that the alpha for actively managed funds is increasing over time, and the average fund beats the S&P 500 by about 100 basis points. He further shows that this has been achieved with lower risk (standard deviation) and he explains why his findings differ from those of Wermers and his co-authors.

Article 3: Letter to the Editor - Luck versus Skill - Round Three

• Author: Multiple Authors
• Publication: Advisor Perspectives
• Publication Date: August 19, 2008
• Intro: Four readers respond to the data presented by Tom Howard of AthenaInvest last week showing that alpha, and hence skillfulness, has increased since 1990. They controvert Howard's findings, and question whether skillfulness can be meaningfully identified among managers with short performance histories.

Article 4: Letter to the Editor - Luck versus Skill - Tom Howard Responds

• Author: C. Thomas Howard, Ph.D
• Publication: Advisor Perspectives
• Publication Date: August 19, 2008
• Intro: Tom Howard responds to the four letters above, and defends his findings that alpha is increasing among active US equity mutual fund managers. He further contends that it is easier to find alpha among managers with shorter performance histories, and that the current environment favors active investing over indexing.

Article 5: Letter to the Editor - When Will Objectivity Enter the Active versus Passive Debate?

• Author: Dave Loeper
• Publication: Advisor Perspectives
• Publication Date: August 19, 2008
• Intro: Dave Loeper, CEO of FundGrades, argues there is a lot of marketing going on by both "passive pundits" and "active advocates" instead of objective research. Loeper uses FundGrades data to question Tom Howard's claims that alpha is increasing over time, and asks whether advisors are making the right decision going with active managers, when evidence of skillfulness is merely an "unprovable intuition."

Article 6: Letter to the Editor - The New Ptolemains

• Author: C. Thomas Howard, Ph.D
• Publication: Advisor Perspectives
• Publication Date: August 26, 2008
• Intro: The astronomer Ptolemy believed the universe revolved around the Earth. To prove his theory he introduced a series of incremental corrections (or "epicycles") to adjust for new observations. Tom Howard of AthenaInvest argues that this is the path taken by advocates of style box benchmarking, and that a new paradigm - analogous to the Copernican heliocentric theory - is needed to evaluate active managers.

Article 7: Letter to the Editor: Alpha during Market Cycles

• Author: Brent Bentrim
• Publication: Advisor Perspectives
• Publication Date: September 2, 2008
• Intro: Brent Bentrim of Caropolis Fiduciary Counsel provides data showing alpha is inversely correlated to the S&P 500 and, hence, it cannot be used as a measure of skill. Furthermore, his data shows the S&P 500 is not the right benchmark for most funds.

Article 8: Howard is Right.The World is Flat!

• Author: Michael Edesess
• Publication: Advisor Perspectives
• Publication Date: September 9, 2008
• Intro: Dave Loeper of FundGrades moves beyond fund subsets and style boxes to address the universe of all domestic equities and the universe of global equities in search of evidence of skill. With these very broad measures, Loeper finds that less than fifty percent of funds had higher return and a majority of funds had greater risk than the broad all domestic equity benchmark. Loeper argues, as he has in the past, that skill probably exists but luck is also present and cannot be ignored.

Article 9: Travels in Four-Packistan

• Author: Michael Edesess
• Publication: Advisor Perspectives
• Publication Date: September 9, 2008
• Intro: Michael Edesess of Fair Advisors argues that it is impossible to determine whether a robustly healthy 95-year-old man who smoked all his life owes his health to the cigarette brand he smoked, or only to luck. The statistical fact of his having lived to be 95 is not enough to prove that the cigarette was responsible. Similarly, it is impossible to determine whether an investment manager who performed well over a long period was skillful, or just lucky. Travel with Edesess to the imaginary land of Four-Packistan to see how this story unfolds.

Article 10: Letter to the Editor: Luck versus Skill and the Analogy to Astronomy

• Author: Adam Apt
• Publication: Advisor Perspectives
• Publication Date: September 9, 2008
• Intro: Adam Apt is an advisor as well as a trained historian of science. Apt challenges Howard's assertion that neo-classical financial theory, like Ptolemaic astronomy in the sixteenth century, is antiquated, and that he has produced observational evidence that will lead to a revolution in financial thought. Apt says an analogy to physics would be more appropriate than one to astronomy.

Article 11: Benchmark Battles Response to: Loeper and Apt Letters

• Author: C. Thomas Howard, Ph.D
• Publication: Advisor Perspectives
• Publication Date: September 16, 2008
• Intro: Last week, Dave Loeper used data from FundGrades to argue that the S&P 500 was a relatively easy benchmark to beat, and that, because it contains only 75% of the market's capitalization, it does not fully represent the universe of securities for US equity mutual funds. This week, Howard uses the more comprehensive Russell 300 index, and argues that is a more difficult benchmark to beat than the S&P 500, and that it also shows an upward trend in alpha.

Article 12: Luck versus Skill in Active Management: A Perspective on the Debate

• Author: Robert Huebscher
• Publication: Advisor Perspectives
• Publication Date: September 23, 2008
• Intro: We summarize the issues in the debate over the role of luck versus skill in active management, specifically the points of disagreement among the debaters.