Invest Like a Pro | Erik Averill, Justin Dyer | AWM Insights #55

Can hiring skilled active managers help you outperform the market?

The premise of active management is that with enough skill, one can consistently outperform the market, or the benchmark on a risk-adjusted basis.

Active managers boast their strategies can deliver. What does the evidence say?

For the 11th consecutive one-year period, the majority (60%) of Active Large Cap funds underperformed the S&P 500. The long-term stats are even worse, 70%+ underperformed over 10 years and 85%+ over 20 years. This is pervasive across all public asset classes and markets.

The verdict is clear, relatively few active managers add real value. 

The evidence supports that markets seem to be very efficient, are unpredictable, and are hard to beat through individual stock picking and market timing.

But it doesn't mean you can't beat the market.

At AWM, we believe portfolios can be designed and managed that can outperform the market without having to out guess it. 

Listen as Erik and Justin discuss how to avoid the traps of active managers and implement what you can do to capture the returns you deserve.

Timestamps

• (00:54) One year since the Covid market bottom, drop in unemployment numbers, and other investment and financial news from the week
• (2:08) Tax implications of cryptocurrency
• (4:01) How important are professional active managers in the public markets?
• (4:58) Looking at the data
• (10:02) Can you figure out who will outperform in public markets ahead of time?
• (11:19) Should we all just move to passive investment?
• (15:23) A better option than paying for active management
• (16:33) What are value drivers in the world of investing?
• (17:36) The importance of portfolio management rules
• (18:36) Why you need an independent advisor – not Wall Street.

More resources at awmcap.co/insights55