I know reddit is evangelical about index investing so before everyone seethes most of my holdings are HSBC FTSE All-World Index Fund Accumulation C (not investment advice) but I am curious about steel-manning active management.
I know this sub likes passive investing because of the statement above, fees, etc. But a question I have always had is what does the above statistic include?
For example, Ben Felix has a video about how the rebalancing of indexes makes you overpay and undersell for IPOs and delistings etc as they are forced by their definition to adjust for those details which is one thing an active manager can avoid. Some funds mandate themselves with targeted returns of e.g. 7% for less volatility or contain bonds or are target-date funds (retirement) so almost by construction will lose to the market but aren't designed for that purpose. Also a lot of funds measure their return as risk-adjusted rather than purely annualised so net of fees I suppose it is conceivable a number of them would beat say, an all world index, after accounting for that and fees? The all-world index (and US even more so) is now also heavily weighted to mag 7 - in theory if an active manager comes close to that net of fees with a wider distribution of stocks then to me that seems a reasonable diversification argument for active management.
I am curious is there anything anywhere that compares apples to apples of 100% equity return maximisers against the index net of fees? Any other considerations?