How hard is it for active money managers to beat the market? – by Steve Lowrie

As we described in our related blog post, “Stop Picking Active Money Managers,” it’s very hard for clever money managers to consistently outperform the rest of the market they are targeting, especially after factoring in the costs involved. Besides, by the time you identify the few who have managed to statistically beat the odds, the chance to get on board with them has already passed you by.

Just how hard is it? The case against active management is strengthened by a bounty of studies informing us that random luck rather than persistent skill has been driving that runaway party train of past outperformance, far more often than not.


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