Jesse Bridgewater

Clean Energy Mutual Funds, ETFs: Does Active Management Pay?

I am always interested in the differences between active and passive investments and so I appreciate you writing this. I also happen to own some GEX and so it is more than an academic interest for me. :)

I do have one bit of feedback about the statistical significance testing that you are performing.

If I understand your setup comparing the active and passive global funds, you have two samples with sizes 5 and 2. Using a t-test with these sizes is aggressive especially without more info about the underlying distribution. You definitely want much larger samples for using a z-test since it relies on the central limit theorem.

Unfortunately with these small samples we can't relay on statistics to help us decide between active or passive investing.

One way to attack the problem might be to look at index sub-samples as proxies for active investment strategies. The one could simulate many possible portfolios and see how many of them beat the indexes.

Thanks for the thought-provoking article.

Jesse Bridgewater

Why You Shouldn't Own DIA, SPY or QQQQ

That is a good point David. I think the general advice is very sound. But it is easy for someone to take the article at face value. Probably some small tweaks to the article will make the point clearly that liquidity is good, but fees are a very important consideration for the long-term investor. Thanks!

Why You Shouldn't Own DIA, SPY or QQQQ

This article is not up-to-date. I would suggest removing it from the ETF Investment Guide. The same advice exists in other related articles as well.

The article state that one should prefer the less liquid IVV over the more liquid SPY because of the better expenses for long-term investing.
As of 3/8/2008 this claim appears to be wrong.
SPY 0.08
IVV 0.09

According to Yahoo! Finance.
finance.yahoo.com/etf/...