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Michael Batnick and Josh Brown look at the curious case of Fidelity's famous Magellan Fund, which has had trouble attracting assets (or even hanging onto assets) despite the fact it's been outperforming the S&P 500 in recent years.
It turns out that there are things advisors and investors are prioritizing over alpha and outperformance these days - such as reliability and low costs.
Josh wrote out a more detailed explanation on The Reformed Broker blog this morning, which details the industry shift away from elements of a portfolio that increase uncertainty and randomness. You can read it here:
http://thereformedbroker.com/2018/06/11/heres-how-it-works-now/
Actively managed funds have made the case that the assets will come back after the next stock market downturn when they navigate the market better than the indices. But recent research has shown that, if anything, market downturns have led to even more redemptions for active funds - even as the money eventually comes back into ETFs and indexes!
We're not sure what the solution will be - let us know your thoughts in the comments below!
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