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Active vs. Passively Managed Funds: Do Investment Managers Add Value
Business Administration in AccountingFinance
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With developments in free to useelectronic trading platforms, the divide of readily available institutional researchbetween investment professionals and normal market participants has narrowed significantly. This has caused the market to become more efficient in correcting pricing errors; therefore,limiting the total market opportunities investment managers can capitalize onto provide alpha fortheir clients. This study examines the returns of forty different actively managed funds in four different market categories: US large-cap, US small-cap, international, and emerging market. After looking at different characteristics that led to the high performance or underperformance of a fund, it was found that the average US large-cap and US small-cap fund does not provide any value. The international and emerging market funds do provide value to their customers; however, theaverage investor would be better off investing their money in the S&P and avoiding the hassles of active management