Invest Like the Best with Patrick O'Shaughnessy Jeff Ptak – The Prospects for Active Management - [Invest Like the Best, EP.16]
Dec 20, 2016
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Impact on Different Asset Classes
- Large-cap and large-cap growth stocks have seen the biggest shift from active to passive management.
- Less liquid and less indexible areas like municipal fixed income are less vulnerable.
Factors Affecting Active Management
- Three cyclical factors hinder active funds: style leadership favoring large-cap growth, a prolonged bull market, and low style dispersion.
- A reversal of these factors, like a bear market or increased dispersion, could benefit active managers.
Active Fund Performance
- Only 20% of surviving funds outperformed their benchmark over ten years, dropping to 8% with dollar-weighted returns.
- This highlights the difficulty of selecting outperforming active funds and the negative impact of investor timing decisions.