Essay

EFB201 Essay Semester One 2019

Weighting = 40%

Length = 2000 words

Referencing = Any QUT accepted method of referencing is fine (e.g. Harvard, APA)

Due Date = Friday 10 May uploaded to Blackboard Site by 11.59pm.

You work as a researcher at an actively managed equity fund. Your supervisor draws your attention to the following two quotes.

“After costs, only the top 3% of managers produce a return that indicates they have sufficient skill to just cover their costs, which means that going forward, and despite extraordinary past returns, even the top performers are expected to be only as good as a low-cost passive index fund. The other 97% can be expected to do worse.”

Eugene Fama, Nobel Prize winning academic

“I’d be a bum on the street with a tin cup if markets were always efficient.”

Warren Buffett, Fund manager

You are assigned the task of writing a critical essay evaluating the quotes of Fama and Buffett and the implications of these for the fund. You should utilise existing literature (scholarly journals) on market efficiency and behavioural finance as well as real world examples to support your arguments. Your essay should include a conclusion on market efficiency and any implications of your research for the future direction of the fund.