A new white paper from FundQuest, entitled Practical Applications of Active and Passive Investment Management, analyzed mutual funds for the 3, 5, 10, and 15-year trailing periods from April 1992 to March 2007, to find out if one strategy really is better than the other.

Unfortunately for active managers, the overall study results support the efficient market hypothesis. The authors state in their findings that "within the general universe, the study found no meaningful difference between active and passive investing approaches."

The study's authors do give some hope to active managers, though. When looking closer at each mutual fund category, some categories emerged as consistent winners against their benchmarks. The study's authors did not intend it to be the be-all-end-all to the active versus passive debate, the authors conclude that "both active and passive investments had their strengths and weaknesses."  

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