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Pros and Cons of Active Management

In: New Trends in Asset Management

Author

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  • Enrica Bolognesi

    (University of Udine)

Abstract

This chapter focuses on the benefits and on the threats of active management retracing the most significant contributions of the extensive literature on this topic. We firstly focus on the definition of active management, active risk and on the sources of alpha. Then we focus on the main issues of interest concerning active management, namely: (1) the higher costs and underperformance of active funds compared with respect to index funds; (2) the attitude of herding which can generate market inefficiencies; (3) the impact of the incentive schemes, short-terminism, and incentive fees on returns; (4) the threats and opportunities of mispricing and market anomalies.

Suggested Citation

  • Enrica Bolognesi, 2023. "Pros and Cons of Active Management," Springer Books, in: New Trends in Asset Management, chapter 0, pages 23-38, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-35057-3_3
    DOI: 10.1007/978-3-031-35057-3_3
    as

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