Can PIMCO's New Preferred Share Active ETF Counter Inflation Concerns?
Justin Kuepper
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Let's examine why preferred stocks could be attractive in today's environment and why...
Another interesting, and related, finding was that investors tended to select better performing funds, evidenced by the fact that full-category, asset-weighted returns were generally higher than equal-weighted returns. In other words, investors seem to be learning that fees do matter. However, researchers also found that this result didn’t hold within fee quartiles. Thus, investors were benefiting simply because they tended to choose funds with relatively lower fees.
Success rates in other styles ranged from as low as 14% for U.S. mid-cap blend funds to as high as 48% for U.S. small value funds. Aside from U.S. mid-cap value and U.S. small-cap value, no other equity asset class showed a success rate of greater than 41%. And in the supposedly inefficient asset class of emerging markets, the success rate was just 37%. Even if you limited your choices to the lowest expense quartile, the success rate of active emerging-market funds was still just 47%. I’d add that in another supposedly inefficient asset class, U.S. small-cap growth, the success rate was only 24%.
Finally, it’s important to keep in mind the caveat that the data in the report is all based on pre-tax returns. Given the generally greater turnover of actively managed funds, failure rates would surely have been much higher for taxable investors. It’s often the case that the largest expense incurred by actively managed funds is the cost of taxes.
The bottom line remains the same: as Charles Ellis wrote in his 1998 book Winning the Loser’s Game, active management is a loser’s game. And like all losers’ games, the surest way to win is not to play.
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Justin Kuepper
|
Let's examine why preferred stocks could be attractive in today's environment and why...
News
Markets have continued their rally over the past two weeks, as falling inflation...
Justin Kuepper
|
In this article, we'll look at Element Funds' new Element EV, Solar &...
Mutual Fund Education
Justin Kuepper
|
Let's take a closer look at how ESG investments have outperformed during the...
Mutual Fund Education
Daniel Cross
|
While CITs and mutual funds share many similarities, there are some key differences...
Mutual Fund Education
Sam Bourgi
|
The phrase ‘bear market’ has been thrown around a lot lately, but it...
Another interesting, and related, finding was that investors tended to select better performing funds, evidenced by the fact that full-category, asset-weighted returns were generally higher than equal-weighted returns. In other words, investors seem to be learning that fees do matter. However, researchers also found that this result didn’t hold within fee quartiles. Thus, investors were benefiting simply because they tended to choose funds with relatively lower fees.
Success rates in other styles ranged from as low as 14% for U.S. mid-cap blend funds to as high as 48% for U.S. small value funds. Aside from U.S. mid-cap value and U.S. small-cap value, no other equity asset class showed a success rate of greater than 41%. And in the supposedly inefficient asset class of emerging markets, the success rate was just 37%. Even if you limited your choices to the lowest expense quartile, the success rate of active emerging-market funds was still just 47%. I’d add that in another supposedly inefficient asset class, U.S. small-cap growth, the success rate was only 24%.
Finally, it’s important to keep in mind the caveat that the data in the report is all based on pre-tax returns. Given the generally greater turnover of actively managed funds, failure rates would surely have been much higher for taxable investors. It’s often the case that the largest expense incurred by actively managed funds is the cost of taxes.
The bottom line remains the same: as Charles Ellis wrote in his 1998 book Winning the Loser’s Game, active management is a loser’s game. And like all losers’ games, the surest way to win is not to play.
Receive email updates about best performers, news, CE accredited webcasts and more.
Justin Kuepper
|
Let's examine why preferred stocks could be attractive in today's environment and why...
News
Markets have continued their rally over the past two weeks, as falling inflation...
Justin Kuepper
|
In this article, we'll look at Element Funds' new Element EV, Solar &...
Mutual Fund Education
Justin Kuepper
|
Let's take a closer look at how ESG investments have outperformed during the...
Mutual Fund Education
Daniel Cross
|
While CITs and mutual funds share many similarities, there are some key differences...
Mutual Fund Education
Sam Bourgi
|
The phrase ‘bear market’ has been thrown around a lot lately, but it...