It is very hard to statistically verify abnormal fund performance because of all except which one of the following?
A)Inevitably some fund managers experience streaks of good performance that may just be due to luck
B)The noise in realised rates of return is so large as to make it hard to identify abnormal performance in competitive markets
C)Portfolio composition is rarely stable long enough to identify abnormal performance
D)Even if successful, there is really not much value to be added by active strategies such as market timing

Question

Quizplus · Accepted Answer

All of the other options are true and contribute to the difficulty of verifying abnormal fund performance, but D is the exception. There can be value added by active strategies, such as market timing, if they can consistently outperform the market. However, this is rare and difficult to achieve, further contributing to the challenge of verifying abnormal fund performance.

It Is Very Hard to Statistically Verify Abnormal Fund Performance