How a New Zealand Superfund “Beat the Market”

Photo by Kelly Sikkema on Unsplash

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You would think endowments and similar funds might find it intimidating to depart from conventional passive investment strategies.

As Larry Swedroe noted in this recent blog post:

  • There’s no evidence of an ability to identify “great-performing” managers before the fact;
  • Past performance doesn’t predict future performance;
  • “Active share” doesn’t predict future performance;
  • The publication of research has led to reduced factor premiums;
  • The pool of “victims” who can be exploited is shrinking;
  • It’s easier to arbitrage away anomalies;
  • The level of skill between the fund managers has narrowed;
  • Evidence favoring investment in actively managed mutual funds is “weak”;
  • The market discovers and corrects mispricings quickly; and
  • Markets have become more efficient, not less.