Active management Quote by William Forsyth Sharpe
“Properly measured, the average actively managed dollar must underperform the average passively managed dollar, net of costs. Empirical analyses that appear to refute this principle are guilty of improper measurement.”
About This Quote
Source Paper: Journal of Financial Economics, 1992
Active funds, after fees, usually lag passive benchmarks; faulty studies mismeasure performance.
In simple terms: Active funds underperform after costs.
Key Takeaway
Prefer low‑cost passive investing.
Themes
finance
investing
performance
costs
Mood
analytical
critical
Type
advisory
educational
When to use this quote
- retirement planning
- portfolio selection
- advisor recommendations
Key Concepts
efficiency
measurement bias
Questions to Reflect On
- How do fees impact long‑term returns?
- When might active management add value?
A Different Perspective
Passive may not suit all market conditions or investor needs.
![“[What if my advisor talks only about returns, not risk?] ... It's his job to take risk into account by telling you the range of possible outcomes you face. If he won't, go get a new planner, someone who will get real.” quote by William Forsyth Sharpe](https://sms4smile.com/quotes/img-quotes/7c9/william-forsyth-sharpe-83220_accounts_what-if-my-advisor-talks-only-about-retu_322124.jpg)
