Finding a mutual-fund manager who can beat the market is tough. Winners flame out. Losers revive. The resurgent losers flame out again.
No wonder low-cost index-based exchange-traded funds and mutual funds—which seek only to mimic the return of a designated slice of the market—have eclipsed actively managed funds as the investment of choice for many people.
... One problem: Over long periods, few fund managers continue to outperform, says Laurent Barras, a finance professor at McGill University in Montreal.
Prof. Barras took a database of active mutual-fund performance between 1975 and 2006 and attempted to count the number of managers whose stock-picking skills were able to add value, after controlling for fees, trading expenses, stock size, style and other factors.
Read full article: Wall Street Journal, January 17, 2014