Is fund manager performance purely down to luck?

16 min Read Published: 26 May 2017

If you are looking to invest using funds there are broadly two types which you can choose from, namely active funds (those that are run by a manager) and passive funds (those that track indices). As you know, there is a lot of debate around which is the better strategy to adopt. However, every research white paper I've studied which claims that one methodology is better than the other always starts with one flawed assumption. That assumption is that you have to buy and hold a fund almost indefinitely. Investors can boost their returns by regularly reviewing their investments and making changes where appropriate, they certainly should not buy and hold indefinitely. This is a core finding of the research behind 80-20 Investor. Of course both strategies (active or passive) have their place and will outperform one another at different times. In effect every dog has its day.

80-20 Investor doesn't distinguish between active and passive strategies.

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