Active Managers and the EAFE Index – An Update
In early 2005 InterSec circulated a client memo on the ability of international equity managers to outperform the EAFE Index at a rare time of sustained underperformance of most active managers. Through the end of 2005 active management has hung on by a thread at the median level while tracking errors continue to trend downward and the median risk-adjusted return gravitates around zero. Meanwhile the difference between the best and the worst manager grows. What does this mean for U.S. pension funds investing overseas and what does it mean to the asset managers doing the actual investing?