Larry Swedroe wrote wrote:American Century vs. DFA
Equal-weighting the American Century funds in each asset class, American Century outperformed in three of the nine asset classes and underperformed in the other six. An American Century portfolio that equal-weights the nine asset classes produced a return of 10.1 percent per year, underperforming by 0.5 percent per year a similar DFA portfolio that returned 10.6 percent.
American Century vs. Vanguard
American Century outperformed Vanguard in three of the seven asset classes where they had similar funds and underperformed in the other four. A portfolio of American Century funds underperformed a Vanguard portfolio by 0.1 percent per year (10.1 versus 10.2).
These results above are consistent with the random nature of active management returns. About 1 out of 3 surviving active funds beat their benchmark. The problem is picking which fund will win in advance, and then dealing with low average outperformance of the winners versus higher underperformance of the losers.
From the American Century Investments paper wrote:In a challenging investment climate, featuring slow growth, modest returns and the probability of heightened risks going forward, the ability to realize positive alpha produced by an active manager is quite valuable.
"The ability to realize positive alpha" says nothing about the probability
of outperformance. The statement merely saying there is a possibility
for alpha, which no one denies. Outperformance using active management is possible, it's just not probable.