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Rating:NYTimes: Passive Beats Active, Active MF Beats Hedge Fund Not Rated 3.0 Email Routing List Email & Route  Print Print
Monday, February 23, 2009

NYTimes: Passive Beats Active, Active MF Beats Hedge Fund

by: Neil Anderson, Managing Editor

The volatile markets have brought the active vs. passive management debate into the limelight again, and the New York Times just added its pen to the discussion. On Saturday, Mark Hulbert reported on a new study after Jack Bogle's heart, released by Windham Capital Management president and CEO Mark Kritzman. Kritzman's findings, first published in the February 1 issue of Economics & Portfolio Strategy newsletter, come down firmly on the side of index funds (pointing to passive management providing better long-term returns net of fees). Kritzman also argues from his findings that hedge funds fare worse than either type of mutual fund.

The active/passive argument also came up earlier this month in the Wall Street Journal, which highlighted Inalytics and its CEO, Rick DiMascio (see MFWire, 2/11/2009).

In the Saturday NYTimes, Kritzman tempers his findings by noting that the long-run active/passive discrepancy is lessened within 401(k)s and IRAs, as taxes in his simulation accounted for about two-thirds of the costs of both actively mutual funds and half of hedge funds' costs. 

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