Why true active management is good and trading is bad for your portfolio

The financial media and many academics like to bash "active" money management. We often read about how most fund managers do not beat benchmarks. We are of a different opinion. Most money managers do not beat the market because they are too closely invested like it. "True" active management should be "benchmark agnostic". Active Share is a simple but effective measure of how a portfolio manager is deviating from benchmarks.

The attached paper shows how an average manager with a high active share performs compared to the markets. Imagine a good one!

Active Share

Investors - even professional ones - are driven by their emotions. In most cases investors are over-optimistic about their ability to predict the future. This generally translates in excessive trading and bad results. We attach here one of the most interesting studies about excessive trading and poor investment results.

Trading is hazardous to your wealth ...

Featured Posts
Recent Posts
Search By Tags
Please Click Below for Important Disclosures and a Customer Relationship Summary:
-  Form CRS (Customer Relationship Summary)
-  Form ADV (Brochure)

This site has some hyperlinks to other websites and blogs. Such external Internet addresses contain information created, published, maintained, or otherwise posted by institutions or organizations independent of us. Livian & Co., LLC does not endorse, approve, certify, or control third party content and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, timeliness, or correct sequencing of information located at such addresses. Use of any information obtained from such addresses is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference therein to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by Livian & Co.


© 2020 by Livian & Co., LLC  |   PRIVACY NOTICE  |  IMPORTANT DISCLAIMER  |