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Can active management save your bacon in a market downturn? Many people think so. After a recent column in which I extolled the virtues of index funds, my Twitter feed erupted in fury. Indexing may be all fine and good when the market is going up, my critics proclaimed, but it suffers from a fatal flaw. When times get tough, they insisted, you need a real, live human being in charge of your money.

Ah, yes: the conventional manager-knows-best theory. There’s an excellent chance you’ve recently heard a version of this chestnut from your financial adviser. According to folks who peddle active funds, money managers are worth their high fees because of their magical ability to discern true value and shepherd you through vicious bear markets.

Especially at a time like now, when turbulence in the markets has rattled investors, the notion that active funds can sidestep trouble makes for a compelling sales pitch. But does it have the additional virtue of being true?

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Only if you squint at the evidence in just the right way. History shows some active funds do perform better than the overall market when disaster strikes.

Unfortunately, many perform worse. Overall, the results are pretty much what you would expect from relying on rolling dice.

Michael Arone, chief investment strategist at State Street Global Advisors, found active funds in the United States generally flopped during the dot-com crash of 2000 and the 2008 financial crisis. “Most active strategies did not outperform the category benchmark over the calendar year during bear markets,” he concluded in a report earlier this year.

In another study, Jeffrey Ptak of Morningstar came to slightly more encouraging conclusions. He, too, examined how active U.S. equity funds performed in up and down markets over the past couple of decades. But Ptak looked at performance over three-year periods, not just during the calendar year in which a bear market occurred.

In a dash of good news for money managers, he concluded that active funds picked up their games in bad times. The not-so-happy news: Active managers still did only slightly better than one would expect from chance.

By Ptak’s calculations, a mere 32% of active U.S. stock funds beat their benchmarks when the market is going up. Almost 60%, though, edged past the index during down periods. This may be because active funds usually keep part of their assets in cash. That cash component tends to improve their relative performance when markets are falling.

The catch is that even this modest success was fleeting. Most funds that did well in bad times failed to keep up with the market during the next three-year period, as things improved. Since the markets rise more often than they fall, this up-anddown showing amounted to a recipe for generally dismal long-term results unless an investor had impeccable timing. “Better performance in down markets is not sufficient reason to choose active U.S. equity funds,” Ptak concluded.

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It’s possible these U.S. results don’t hold true in other markets, but I wouldn’t bet on it. An older study done by Christopher Philips of fund giant Vanguard found active European funds offered little protection when the market fell 10% or more. He discovered active funds only surpassed their benchmarks in two of five European bear markets between 1990 and 2003.

To make matters worse, funds that topped their index in one bear market did not dependably outperform in the next one. “While there will always be a group of funds that outperforms in every market cycle, consistently selecting those winning funds in advance is difficult,” Philips warned.

Remember this the next time someone tells you active funds can protect you from disaster. That theory holds true only if you have the uncanny ability to spot a downturn coming, and the even more uncanny ability to spot a manager who will do better than the plunging market index. Which, of course, raises an obvious question: If you truly do believe you can predict future bear markets so accurately, why don’t you just take refuge in cash instead?

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