Question

Evidence by Blake, Elton, and Gruber indicates that, on average, actively managed bond funds ______. outperform passive fixed-income indexes underperform passive fixed-income indexes by an amount equal to fund expenses underperform passive fixed-income indexes by a wide margin perform as well as passive fixed-income indexes

Answer 1

The answer is: underperform passive fixed-income indexes by an amount equal to fund expenses

Step-by-step explanation:

According to Blake, Elton, and Gruber (The Journal of Business, 1993), the only people who benefit from actively managed bond mutual funds are those that work for the mutual funds and not their clients.

They discovered that when the mutual funds increased their fees in 1%, the total performance decreases in 1%.