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Pros and Cons of Active Management

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New Trends in Asset Management

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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.

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Authors and Affiliations

  1. Department of Economics and Statistics, University of Udine, Udine, Italy

    Enrica Bolognesi

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  1. Enrica Bolognesi
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Correspondence to Enrica Bolognesi .

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Bolognesi, E. (2023). Pros and Cons of Active Management. In: New Trends in Asset Management. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-35057-3_3

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  • DOI: https://doi.org/10.1007/978-3-031-35057-3_3

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  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-031-35056-6

  • Online ISBN: 978-3-031-35057-3

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

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