Actively managed mutual funds don't perform as well as they appear, as the result of hidden "survival bias" in Morningstar mutual fund data, according to a study by Savant Capital Management and Zero Alpha Group. The report found that over the period 1995-2004, actively managed funds in all nine of the Morningstar Principa "style boxes" trailed corresponding.
"The mutual fund industry systematically and significantly overstates fund performance in a way that makes actively managed mutual funds look much more competitive with indexes than is actually the case," Brent Brodeski of Savant, a co-author of the report, said in a statement. "What we are really looking at here are 'juiced' mutual fund performance numbers creating a misleading picture."