Popular science article by Triinu Tapver, early stage researcher at TalTech Department of Economics and Finance, was published in ERR Novaator as a part of the competition „Science in 3 minutes“. The article is based on her research which studies skill and luck in the performance of actively managed funds in Central and Eastern Europe.
The research indicates that although actively managed mutual funds may offer above-average returns in the short term, in most cases it is due to luck rather than fund manager skills.
Leaving aside the impact of the 2008 financial crisis, only 2 per cent of the funds in the study offered consistently higher returns than the market. However, nearly 40 per cent of fund managers make such bad decisions that lead to lower returns than could be achieved completely randomly without applying skills.
See the full article (in Estonian) here. The final results of the "Science in 3 minutes" contest will be announced on 5 February 2021.