PT  - JOURNAL ARTICLE
AU  - Jonathan B. Berk
AU  - Jules van Binsbergen
ED  - Byrne, John Aidan
TI  - Practical Applications of Active Managers Are Skilled: <em>On Average, They Add More Than $3 Million per Year</em>
AID  - 10.3905/pa.2016.3.4.159
DP  - 2016 Apr 30
TA  - Practical Applications
PG  - 1--4
VI  - 3
IP  - 4
4099  - https://pm-research.com/content/3/4/1.15.short
4100  - https://pm-research.com/content/3/4/1.15.full
AB  - Active Managers Are Skilled: On Average, They Add More Than $3 Million per Year Jonathan B Berk Jules van Binsbergen How can an investor tell whether a fund manager is any good? The most common measure of a manager’s skill has been gross alpha, but alphas decrease as assets under management rise. This article in The Journal of Portfolio Management , Active Managers Are Skilled: On Average, They Add More Than $3 Million per Year , maintains that active fund managers do add value.In an interview with Institutional Investors Journals , Jonathan Berk of Stanford Graduate School of Business and Jules van Binsbergen of The Wharton School urge investors to measure skill by the value added by the manager, factoring in both alpha and fund size. Using their measure, the evidence of skill can’t be attributed to luck. The evidence also shows investors seem to recognize and reward funds for this skill.TOPICS: Manager selection, portfolio construction