Over $4 trillion is currently managed by equity mutual funds in the ., with roughly 90 percent invested in actively managed accounts. These mutual funds hold over 25 percent of the outstanding equity value of the average . common stock. This high level of ownership makes it very unlikely that the equity fund industry as a whole is able to outperform the market by a large margin. However, several recent papers show some evidence of manager skills among subgroups of funds (see, for example, Gruber (1996)). To detect funds with positive or negative performance, the standard approach in the academic literature (., Jensen (1968), Ferson and Schadt.
