Fundmanagement

Anger is growing with those who manage money, particularly with those             [diligently, poorly, sincerely, honestly] performing active managers who claimed that it was precisely during             [successful, fruitful, tough, blessed] times that they would come into their own against indexed funds.

In Britain, two-thirds of active managers                [overperformed, underperformed] the index last year, even before the fees that they             [added, charged, calculated, estimated] are subtracted.

Those people are handsomely           [scolded, rewarded, told off] for losing money. Each year they pocket 1-2% of the           [accounts, assets, incomes, profits] they manage, on top of initial charges of as much as 5%.Indexers, by contrast, charge only 0.5%a year, with no upfront fees.

An average fund manager will beat the market some of the time. Over the long         [action, flight, act, run], though, the great majority of fund managers will do no better than the market average, particularly once their charges are         [given, turned, shown, taken] into account.

The chances are slim of finding one of those blessed few who can show real,             [periodical, sustained, occasional, piecemeal] skill in stock-picking. Even if you find one, you may discover that what made him good in one economic period will serve him            [much more, more, less] well in the next.

Believers in the so-called efficient-market hypothesis, developed by American economists in the 1960s, have tried to demonstrate the impossibility of             [infrequent, uncommon, consistent] outperformance.

They argue that all useful information that is available to market              [participants, suppliers, soldiers, employees] is already factored into a company's share price.

Additional analysis of a share by, for instance, taking a closer look at a company's books or talking to its management - as well as all attempts at discovering patterns in price movements will be …             [useful, beneficial, futile, profitable] .

This theory opened the door to those offering merely to         [spot, track, notice, charge]the index. Index-tracking grew hugely during the        [goat, bull, sheep, duck] market of the 1980sand 1990s.

In the       [bear, pork, beef, swan] market of the past two years, people have not         [fined, saved, pulled, sent] out much money from index funds - or at least, not yet.

Not everybody                  [is buying, buys, had bought, has been bought] the efficient-market hypothesis, however.

George Soros, a well-known speculator, thinks: he made his money because markets often over- or              [undergo, undervalue, underperform, undertow] things.

He also challenges the view that share prices are simply a passive reflection of             [subsequent, underlying, frequent, occasional] value, or of the expected earnings of a company.

A high share price might, for example,          [perform, trigger, foresee, predict] certain actions: a public offering of a company's shares, or a merger or an acquisition.

A low share price,            [owing to, because, meanwhile, as] ,might stop plans for an initial public offering or a merger. This is what Soros calls the market's 'reflexivity'.

If knowledge of such a two-way relationship between share prices and assets can be          [brought, put, taken, found]to good use, a fund manager might consistently do better than the market Peter Lynch.

Yet a few examples among a cast of many thousands of fund managers offer only small              [acquisition, consolation, merger, acceptance] to the average investor, who will almost always be better off - or these days, rather worse off putting his money in an index fund.