Fund Managers May Beat the Market, Sometimes

Mark Hulbert, editor of The Hulbert Financial Digest, reports on a new study which finds "substantial numbers [of mutual fund managers] can predictably outperform it [the market] during parts of the economic cycle," in this article from the New York Times. The study, by Doron Avramov and Russ Wermers, finance professors at the University of Maryland, is called "Investing in Mutual Funds When Returns Are Predictable,"and will soon be published in the Journal of Financial Economics. The authors based their research on the assumption that "that significant numbers of managers may have market-beating ability at some stages of the economic cycle but not at others," which led to a fund switching strategy.

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(May '04-Jun '05)