Yesterday, we discussed the history and overview of the efficient market hypothesis. Today we’ll look at some of the evidence on the efforts of mutual funds and pension plans to generate alpha.
Each year, Standard & Poor’s publishes its Indices Versus Active Funds Scorecard, more commonly referred to as SPIVA, presenting the evidence on the performance of actively managed mutual funds relative to their appropriate index benchmark. And as sure as the sun rises in the east, every year the results are virtually the same – with the large majority of active managers underperforming. This is true whether we are talking about stock or bond funds.
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