Indexes Beat Stock Pickers Even Over 15 Years

For all intents and purposes, the (page 1, 4/13/2017 WSJ) article referenced below drives an empirical stake into the heart of the “case” for active versus passive portfolio management. Twenty-six years ago, William F. Sharpe (one of the inventors of the Capital Asset Pricing Model) drove a conceptual stake into the heart of the “case” for active versus passive portfolio management in his famous Financial Analysts Journal essay entitled “The Arithmetic of Active Management”, available at http://www.cfapubs.org/doi/pdf/10.2469/faj.v47.n1.7.

Most actively managed U.S. stock funds were beaten by their market benchmarks over the past decade and a half, a record of underperformance that helps explain why stock pickers are losing billions of dollars in assets each month to low-cost passive investments that track indexes.

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