Study Finds that Simple is Better in Mutual Fund Management

A recent study conducted by researchers at Queen’s University in Ontario shows that, on average, domestic stock mutual funds that use hedge fund strategies such as leverage, options and/or shorting underperformed their peers, writes John Rekenthaler in a recent Morningstar article. Using 17 years’ worth of U.S. mutual fund return data, the study delved into why this occurred. “As you may suspect,” writes Rekenthaler, “some of the shortfall owes to extra costs.” However, he says, that’s not the only issue. While the article emphasizes the “dangers” of mutual fund research that “consumes massive amounts of data, and returns summary statistics,” […]