I went to an investment advisor firm party for rich people

[Mandala]

Believe it or not, there are some half decent mutual funds. Look at the 15 year return for this one. Used to be the Sceptre Equity Growth Fund and had some fantastic returns around between 20 to 30 years ago with a different fund manager(Allan Jacobs) who then took off to Sprott and then left the industry shortly afterwards.

I do not believe it.

Yes, there are mutual funds that have beaten the market over a long period of time, but that is because there are so many mutual funds that some will beat the average by mere chance and past performance is not indicitive of future performance

 

[jeff2]

I do not believe it.

Yes, there are mutual funds that have beaten the market over a long period of time, but that is because there are so many mutual funds that some will beat the average by mere chance and past performance is not indicitive of future performance

What often happens is either the manager leaves, the style goes out of fashion or becomes overpriced, or competitors catch on.
As the chart above shows(speakercontrols), there is more inefficiency in pricing for small/ mid caps.
But if the fund gets too big, especially in a smaller market like Canada, then it is more difficult to add alpha in small/mid caps.

 

[jeff2]

Too lazy to look but I get Vanguard Canada has something

I could not find anything. I have some other Vanguard ETFs though.

 

[Mandala]

What often happens is either the manager leaves, the style goes out of fashion or becomes overpriced, or competitors catch on.
As the chart above shows(speakercontrols), there is more inefficiency in pricing for small/ mid caps.
But if the fund gets too big, especially in a smaller market like Canada, then it is more difficult to add alpha in small/mid caps.

I suspect the funds were beating the average by factoring. IE small caps, tech, many factors are involved . Those factors worked for a few years then started to drop and they got lucky going in but not smart enough to get out

 

[jeff2]

I suspect the funds were beating the average by factoring. IE small caps, tech, many factors are involved . Those factors worked for a few years then started to drop and they got lucjy going in but not smart enough to get out

The mid and more so small caps have very little analyst coverage. An index like the S & P 500 has so many analysts covering those companies that all the info is priced into those stocks.

 

[Zoot Allures]

The mid and more so small caps have very little analyst coverage. An index like the S & P 500 has so many analysts covering those companies that all the info is priced into those stocks.

Agree.

It is simple, the greater the risk the greater the potential profit

Alpha vs beta is built into the price

 

[jeff2]

Agree.

It is simple, the greater the risk the greater the potential profit

Alpha vs beta is built into the price

Where you think the market is very efficient, go passive. Only consider active management in inefficient markets and even then with caution.

 

[Zoot Allures]

Where you think the market is very efficient, go passive. Only consider active management in inefficient markets and even then with caution.

We seem to agree

Chasing positive alpa is a fool's game as you have to beat the experts who have built beta, or risk, into the price