2019-07-27 17:37:00 Sat ET
stock market gold oil stock return s&p 500 asset market stabilization asset price fluctuations stocks bonds currencies commodities funds term spreads credit spreads fair value spreads asset investments
Capital gravitates toward key profitable mutual funds until the marginal asset return equilibrates near the core stock market benchmark. As Stanford finance professor Jonathan Berk suggests, capital flows equilibrate persistent mutual fund returns relative to the stock market benchmarks. Since investors first direct capital to the best active mutual fund managers, these fund managers receive so much money that it affects their ability to generate superior returns. The average return declines to fit the average return for the second-best fund managers. At this stage, investors become indifferent to investing with the first-best and second-best fund managers, so capital flows equilibrate until their average return declines to match the average return for the third-best fund managers.
This process continues until the average return of investing in most active mutual funds declines to match the stock market benchmark. Capital flows can thus reflect persistent asset returns in the transition toward the dynamic equilibrium outcome. Only high-skill fund managers can consistently earn superior average returns when numerous fund managers compete for scarce capital flows. The rationale suggests that investors who choose to invest with active fund managers cannot expect to receive positive excess returns after we apply appropriate risk and fee adjustments.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2019-06-15 10:28:00 Saturday ET

The Sino-American trade war may slash global GDP by $600 billion. If the Trump administration imposes tariffs on all the Chinese imports and China retaliate
2019-08-28 14:46:00 Wednesday ET

Santa-Barbara political economy professor Benjamin Cohen proposes new fiscal stimulus to complement the current low-interest-rate monetary policy. Cohen fin
2024-10-27 07:56:01 Sunday ET

Stock Synopsis: China Internet tech titans continue to grow amid greater competition. We launch our unique coverage of top 25 China Internet stocks. In t
2018-04-11 09:37:00 Wednesday ET

North Korean leader and president Kim Jong-Un seeks peaceful resolution and denuclearization on the Korean Peninsula. When *peace* comes to shove, Asia
2017-12-14 12:41:00 Thursday ET

Federal Reserve raises the interest rate by 25 basis points to the target range of 1.25% to 1.5% as FOMC members revise up their GDP estimate from 2% to 2.5
2020-02-26 09:30:00 Wednesday ET

Goldman Sachs follows the timeless business principles and best practices in financial market design and investment management. William Cohan (2011) M