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More evidence that alpha generation is shrinking | TEBI

evidenceinvestor.com · 1,830 words · saved by 1 readers

For active nvestors, the holy grail is identifying a fund manager who will generate alpha. But finding alpha is itself becoming increasingly hard.

By LARRY SWEDROE For investors in actively managed funds, the holy grail is finding the fund manager who will in the future be able to exploit market mispricings — buying undervalued stocks and perhaps shorting those that are overvalued. While it’s easy to identify those great-performing managers after the fact, there’s no evidence of the ability to do so before the fact. For example, there are dozens, if not hundreds, of studies confirming that past performance is a poor predictor of the future performance of active managers , which is why the SEC requires that familiar disclaimer. These stud

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