@article {Berk27, author = {Jonathan B. Berk}, title = {Five Myths of Active Portfolio Management}, volume = {31}, number = {3}, pages = {27--31}, year = {2005}, doi = {10.3905/jpm.2005.500350}, publisher = {Institutional Investor Journals Umbrella}, abstract = {Five myths are debunked here. It is not true that: the return investors earn in an actively managed fund measures the skill level of the manager; the average active manager is not skilled and therefore does not add value; if managers are skilled their returns should persist{\textemdash}they should be able to consistently beat the market; in light of evidence that there is little or no persistence in actively managed funds{\textquoteright} returns, investors who pick funds on the basis of past returns are not behaving rationally; and finally, because most active managers{\textquoteright} compensation does not depend on the return they generate, their compensation is not performance{\textendash}based.}, issn = {0095-4918}, URL = {https://jpm.pm-research.com/content/31/3/27}, eprint = {https://jpm.pm-research.com/content/31/3/27.full.pdf}, journal = {The Journal of Portfolio Management} }