Concentrating on Success

April 2004
Journal of Financial Planning;Apr2004, Vol. 17 Issue 4, p24
Academic Journal
This article presents some highlights of a study conducted by three professors--Clemens Sialm, Marcin Kacperczyk and Lu Zheng, at the University of Michigan Business School, regarding the performance of over 2,000 actively managed mutual funds that concentrated on fewer stocks from 1984-1990 versus more diversified funds. They found that the more concentrated funds, which tended to be younger and smaller, performed better, after adjusting for risk and style, than less concentrated funds. More important, they found superior performance even after adjusting for expenses, since the expenses of concentrated funds demonstrated that some mutual fund managers have superior investment ability.


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