Smart manager or smart beta? How to get active management for free

The merits of active and passive management styles depend on market efficiency

When you pick a manager, you should consider the type of manager you are looking for, their style and the risk premiums they are willing to accept. However, the effectiveness of their style depends on how efficient markets are. This article shares some insights on market efficiency from two Nobel laureates. We also look at the insights that South African data provides on the topic. In light of our discussion, we end with a possible framework to achieve the goals of optimal portfolio construction at a much lower cost.