Re: Good investing paper on mutual funds and alpha
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Yes, well, we already had research that proved momentum in MF outperformance is persistent and you can earn free alpha from that.
This is just more icing on the cake....no, an extra cake!
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Well, let's not get ahead of ourselves. Finding a statistically significant relation between past and present outperformance doesn't indicate evidence on how likely it is to pick a single outperforming fund manager (or even N outperforming fund managers) and betting on them.
So while the evidence suggests/indicates that, on average, outperformers continue to outperform, there's a lot of noise in that data and I'd guess you'd have to get a good deal of diversification across those funds before you were likely to outperform.
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