Burton Malkiel On Actively Managed Funds

Burton MalkielJohn Stossel from Fox Business discussed with Burton Malkiel, professor of economics at the Princeton University, whether actively managed mutual funds are a sound investment. However, the fact is that over the last decade (during which we experienced two stock market crashes) passively managed funds has beaten more than 2/3 of actively managed funds. The reason behind this finding is the high cost of active management. Active investors are left with less money to work for them. The next reason is the random character of financial markets.

What is more, at the beginning of this year Mr. Stossel formed a 30 stocks portfolio by throwing darts into the stock section of a certain newspaper. The result: He has beaten 10 of the biggest equity mutual funds in the USA year to date. It seems you can beat the pundits on Wall Street by throwing darts or tossing a coin.


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