The Ongoing Case Against Active Management

A recent report from JPMorgan Chase adds fuel to the fire of Bogle-heads and others who support the case against active management of mutual funds.

In other words, in contrast to "passively managed" investment vehicles such as index funds and ETFs, funds that employ highly paid fund managers to "actively manage" securities selection and portfolio management are creating no value through that active management.

In fact, actively managed funds appear to be destroying value for investors on a relative basis.

Bloomberg reports that the JPMorgan research report reveals that 2011 has been the worst year for active fund managers since 1998.

47 percent of 2,806 funds tracked by JPMorgan underperformed their benchmarks by more than 2.5 percent.

At the same time, "only 13 percent of the funds beat their benchmarks by the same margin."

These figures presumably do not include the higher fees that typically accompany actively managed funds.

Source: Bloomberg

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