Equity Security Analysis

A sign that the market 'works' reasonably well is that it is hard for individual fund managers to consistently outperform the market index. The evidence out there is that this is in fact the case. Here's the latest media report of this. Key graphs:

Consistency - the ability to sustain good returns over time - is an important part of what makes a successful fund; as is persistence, the fund manager's ability to consistently add value and achieve above-benchmark investment returns.

Over any given period there will be some active managers who produce above-benchmark returns, but fund analysis consistently shows that most active Australian equity managers have a tough time producing persistently above-benchmark returns after fees.

It is very rare for a top-performing manager one year to sustain this performance over future years.