Interesting article that confirms some sacred cows ("most active mgrs underperform the index") but questions some others ("you can't predict which active mgrs will outperform").
One big takeaway is, Avoid closet index funds at all costs. That won't be news to most people here, I think. I wonder when/if the active-share numbers for existing mutual funds will be published?
Personally I'll stick with passive mgmt wherever possible, especially in liquid markets. Even with the slight theoretical advantage that the paper assigns to high active-share funds, I still can't stomach a stock-picker in charge of my investments.
BTW, did anyone notice how far back the author tested? I couldn't find the dates that bounded his data.
And if I claim to be a wise man, it surely means that I don't know.