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Podcast: Excess Returns
Episode: Why the S&P 500 is an Active Portfolio, and Other Observations on the Stages of Active Management
Description: Active management deserves all the criticism it gets. After all, over 80% of equity managers underperform their benchmarks over the long-term and active managers charge vastly higher fees compared to passive indices.
But active management also gets a bad rap. There are many active strategies that perform very well over time, and justify the fees they charge.
How can both of these conflicting statements simultaneously be true? The answer lies of the definition of the term “active management” and the fact that many strategies that investors consider passive also have significant active components.
In this...