When William Sharpe wrote his paper “The Arithmetic of Active Management,” he demonstrated that active investors must earn the same rate of return as passive investors in aggregate. The difference was that the costs of active management would cause active investors to underperform passive investors as a whole. But how much does active management cost? Would you believe about $80 billion per year?
Reead the complete article here: The Costs of Active Management – CBS MoneyWatch.com.