Dan Goldie, a financial planner in Portola Valley, Calif., doesn't think so. That's why Mr. Goldie favors index funds. Indeed, once you factor in taxes, actively managed funds look even worse. In the Spring 1993 Journal of Portfolio Management, investment experts Robert Jeffrey and Robert Arnott calculated that, to match an index fund's post-tax return, a fund with 100 percent portfolio turnover would need to outpace the market by 2.2 percentage points a year. This figure assumes you pay taxes on each year's distributed gains, but doesn't reflect the taxes owed upon liquidating a fund.
Studies show that there's no reliable way of doing that.
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