Copycat Funds: Is This the End of Active Investing?

Abstract: The aim of this paper is to see whether it is possible to efficiently copy the investment strategy of US equity-only mutual funds, based on their disclosure to the SEC. Copycat performance is evaluated at the full sample, and then in smaller groups in order to determine whether some types of funds are better candidates for copying. The results indicate that the copycat funds can keep up with their primitive counterparts in all instances, and even outperform the funds with a high expense ratio and funds that were easy to copy in the past. Different copycat fund sizes are also considered, but play no significant role in the results.