Active Share and Mutual Fund Performance

Should a mutual fund investor pay for active fund management? Generally, the answer is no. A number of studies have concluded that the average actively managed fund loses to a low- cost index fund, net of all fees and expenses.1 However, active managers are not all equal: They differ in how active they are and what type of active management they practice. These distinctions allow us to distinguish different types of active managers, which turns out to matter a great deal for investment performance… 

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