When it comes to portfolio liquidity, diversification matters.
For individual investors, trading more is generally a bad idea. The more you trade, the more you spend on fees and other trading costs. But the same is not true for active mutual-fund portfolio managers.
There is no shortage of money managers who claim they can beat market benchmarks, some with impressive track records.
A fund’s ability to beat its benchmark tends to deteriorate as the fund gets older, in part because of the continued arrival of new competitors.