Active and Passive Investing
Have Active Managers Outperformed in the Long Run? (cont.)
Apparent positive empirical performance of active managers as a group
Despite positive alphas on the previous page, our inferences are colored by the oft-quoted experience of U.S. mutual fund
managers with negative net alphas since 1960s
Indeed, it is important to recall that measured alphas may be exaggerated by reporting biases, e.g., survivorship and backfill
biases
To what extent do the positive alphas for the average active manager reflect reporting biases and to what extent true
outperformance by delegated active managers? The jury is still out.
(AOR
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