<prompt> Human: I had an interesting meeting where one of my executives mentioned that, according to academic research, mutual fund managers were able to beat the market, on average, but only by an amount small enough to be offset by fees. Can anyone point me to some research on this? I was under the impression that nobody can beat the market on average over the long run even before fees.  <response>: By definition the sum of all portfolios active and passive is the market. If the passive portfolios track the market, this means the sum of all active portfolios has to get market returns though some win, some lose. When you subtract fees, active funds must on average lose by construction.This doesnt mean that funds dont exist that can beat the market long term, before or after fees. It is very difficult for any academic study to disentangle luck from skill statistically anyway 