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New Research Suggests Active Management May Be Better for Investors

New Research Suggests Active Management May Be Better for Investors

20 years ago, Carhart published a now famous research study that suggested passive management of funds, especially the use of index mutual funds and ETFs, was better for investors. This helped create the idea that active management did not provide value to investors. A newly published review conducted by professors Martijn Cremers, Mendoza College of Business, University of Notre Dame; Jon A. Fulkerson, University of Dayton, and Timothy B. Riley, Sam M. Walton College of Business, University of Arkansas suggests otherwise. In fact, their study, “Challenging the Conventional Wisdom on Active Management: A Review of the Past 20 Years of Academic Literature on Actively Managed Mutual Funds,” concludes that “that the current academic literature finds active management more promising for investors than the conventional wisdom claims.”

 

 

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