September 28, 2018
Public Safety Personnel Retirement System
State of Arizona
September 28, 2018
Contact: Christian Palmer
Journal of Index Investing publishes PSPRS research
Bill Thatcher's index vs. active funds work continues to generate interest
ARIZONA – The Journal of Index Investing this winter will feature recently completed research of PSPRS portfolio manager Bill Thatcher, whose examination sheds light on passive and actively managed investment performance.
The academic and professional journal will publish Thatcher’s analysis of how and when low-cost index funds outperform actively managed mutual funds. However, Thatcher’s premise, which he calls “style purity,” also challenges popular notions that passive index investing is superior at all times.
“The research gives investors another tool to evaluate actively managed funds competing against index funds,” said Thatcher, whose previously published research earned coverage in the Wall Street Journal. “It shows that all actively managed performance is not equal, and that the question of when an active manager beats the index is as or more important than whether they beat their index in the first place.”
Thatcher’s research provided further evidence that domestic index funds outperform actively managed mutual funds of the same asset class during years in which the respective asset class achieved higher growth than others.
These asset classes include large, mid and small cap indices, named after respective market share sizes, and also against value, core and growth asset classes. Just which classes become top and bottom performers vary according to year while consistently accurate predictions have proven elusive for investors.
“It’s anybody’s guess what type of index will outperform others in any given year but there is clearly value in evaluating active and passively managed funds with the added context of asset class and past performance,” said Thatcher, whose career includes roles with Mercer Investment Consulting, Commonfund and Charles Schwab. “I’m excited that the Journal of Index Investing also found this intriguing enough to publish.”