‘Conventional Wisdom’ on Active All Wrong: Academics

Martijn Cremer’s presentation on a new paper he co-authored, “Challenging the Conventional Wisdom on Active Management: A Review of the Past 20 Years of Academic Literature on Actively Managed Mutual Funds,” was covered by Ignites, a Financial Times service. Cremers is interim dean and the Bernard J. Hank Professor of Finance at Notre Dame’s Mendoza College of Business. Read the story here.

In a presentation on the paper at the Investment Advisor Association’s conference last week in Dallas, Cremers told attendees that research on active management has been skewed toward U.S. equity, where there is the most available data. Further, he notes, it an asset class “that is least persuasive to consider active in.”

The asset classes where active most commonly has success have been international, small-cap and emerging-markets products, he adds. That opportunity has even pushed one manager, WisdomTree, to switch its passive emerging ETFs to active.