Section 2c Professional Fund Managers

Question 1

Does fund managers generate a positive alpha? (short answer)

Answer 1

Yes- for gross alpha
No- for net alpha

Question 2

Which kind of fund managers claims to beat the market

Answer 2

Passive style portfolio management
They offer financial products based on a bundle of stocks with certain characteristics
They charge less fees

Question 3

What kind of fund managers claim to beat the market

Answer 3

Active portfolio management
They charge higher fees for this

Question 4

The case of a skilled fund manager

Answer 4

A skilled manager attracts more money until investment opportunities are exhausted.
They generate more alpha on average but charge higher fees as well.
This makes net alpha zero