At IndexUniverse, Larry Swedroe, director research for a group affiliated with Buckingham Asset Management, took on myths about active management's benefits. Swedroe says active management costs more than investors think and consistently underperforms:

Collectively, active managers must always underperform passive investors in all asset classes and in bull or bear markets because of expenses. It’s just simple math.

Swedroe picks apart data on American Century's [profile] funds page, finding that American Century outperformed in three of the nine asset classes and underperformed in the other six. He also found that American Century funds outperformed Vanguard [profile] in three of seven asset classes where they had similar funds and underperformed in the other four.

While it’s true that not all active managers are the same, it’s also true that the vast majority of active managers underperform. And the evidence is clear that investors haven’t been able to identify the very few future winners ahead of time.

To read the full story, click here. 

Edited by: Casey Quinlan


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