| Summary: | The article presents a study on the costs of active management based on five different
measures: the active expense ratio, the active fee, the new active fee, the active
to passive fee, and the maximum acceptable fee (MAF) ratio. There are two main
objectives of the article. The first one is to indicate which measure is best in estimating
the costs of active management. The second one is to check whether the
costs incurred are related to the value added for investors. In the study, 34 Polish
equity mutual funds are evaluated. Based on the obtained results, it can be concluded
that two measures, the active to passive ratio and the MAF ratio, provide
the most practical information. What’s more, active management does not generate
any excess returns. On the contrary, a reduction can be observed.
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