n Studies in Economics and Econometrics - Active versus passive investing I : the South African experience

Volume 29, Issue 2
  • ISSN : 0379-6205


The two investment strategies, active and passive (index) investing, are evaluated by comparing the average performance of actively managed funds in the general equity category of the South African unit trust sector with its benchmark, the ALSI index. Various comparative methodologies are followed in the analysis and cover the period 1988- 2003.

When the upfront costs applicable to the active funds are excluded it is found that active funds on average outperform the index benchmark. However, when including these costs the index outperforms the average of active fund returns. Similarly, on a risk-adjusted basis the index benchmark fares better than the average of actively managed funds.

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