The research overwhelmingly has shown that active investment managers do not consistently outperform the market. We therefore choose an asset class approach to choosing investments using index style investments.
Measuring the True Cost of Active Management by Mutual Funds
Journal of Investment Management
Ross M. Miller
2007, Vol. 5, No. 1: pp29-49
What the paper says: Even the average mutual fund, which ostensibly provides only active management, will have over 90% of the variance in its returns explained by its benchmark index.
In the author's own words: "funds engaging in closet or shadow indexing charge their investors for active management while providing them with little more than an indexed investment."
On Persistence in Mutual Fund Performance
The Journal of Finance
Mark M. Cahart
March 1997, Vol. LII, No. 1: 57-82
What the paper says: There is no evidence that choosing a managed fund that had outperformed in the past would provide above average returns into the future.
In the author's own words: "The results do not support the existence of skilled or informed mutual fund portfolio managers."
Returns From Investing in Australian Equity Superannuation Funds, 1991-1999
Services Industry Journal
Michael Drew and Jon Stanford (University of Queensland)
September 2003, Vol. 23, Issue 4: 12 - 24
What the paper says: Rather than add value for investors, the fund managers in the superannuation industry ended up performing so poorly that they actually underperformed the average index return by a significant margin.
In the author's own words: "as an industry, investment managers destroyed value for superannuation investors for the period 1991 through 1999, under-performing passive portfolio returns by 2.80-4.00 per cent per annum on a risk-unadjusted basis'".