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4 3 | RESULTS 3.1 | The Universe Our study covers the entire Morningstar Open End Fund (i.e., Mutual Fund) universe as of April 2018. Table 1 shows that this universe (both dead and alive funds) has grown since we published the previous version of this research four years ago. In particular, not only has the number of managers increased (from slightly fewer than 12,000 five years ago to almost 13,000 now), but also the number of Morningstar categories has risen (from 113 to 129). As before, we exclude some categories such as commodities precious metals, consumer defensive, miscellaneous sector, trading-inverse/trading-leveraged, and trading-miscellaneous, as the number of managers in those categories is too small to obtain statistically meaningful and valid results. 3.2 | Active or Passive Classification Based on Entire Data History Although we note significant trends in the proportions of positive and negative alpha managers in various categories through time (more on this in section 3.3), the proportion estimates based on the entire data history have not shown significant changes. 2 This is because the entire data sample spans more than 40 years, as highlighted in Table 1, whereas we have added only four years of data since the last study. Even so, certain Morningstar categories experienced meaningful changes in the percentile of positive and negative alpha active managers (see Table 2 for details). For example, the proportion of positive alpha managers in the Foreign SMid Core category based on the entire data history significantly decreased over these last four years (34% currently versus 74% four years ago). Other categories that included meaningful changes in the proportion of positive alpha active managers, when the whole data history is used, include Foreign SMID Value and Commodities. Some changes highlighted above have resulted in a change in the "active," "passive," and "neutral" moniker assigned to the category (see Table 2 for details). In particular, Commodities category has moved from "passive" to "active." Also, Large Cap Value has moved from "passive" to "neutral." The rest of the category switches (Emerging Market Bond, Intermediate Bond, and MidCap Core) are from "neutral" to "passive." FOR ONE-ON-ONE-USE WITH A CLIENT'S FINANCIAL ADVISOR ONLY © 2022 Envestnet. All rights reserved. "Time-trend" Analysis: We iteratively walk through the four decades of available data and at every time period use only the most recent data (most recent 3 years at that particular point in time) to analyze manager performance. Unlike whole sample analysis, trend analysis, implemented by applying regression analysis over rolling periods, ignores distant past data and focuses only on the most recent data. Table 1 Description of the universe used in the study. Apr-2018 Apr-2022 NUMBER OF FUNDS 11831 12757 Alive 6471 6116 Dead 5360 6641 NUMBER OF MORNINGSTAR CATEGORIES 113 129 Included 102 114 Excluded 11 15 TIME PERIOD Jan 1980 - Apr 2018 Jan 1980 - Mar 2022 Number of Months 468 507 Earliest Category Start Jan-1980 Jan-1980 Latest Category Start Apr-2014 Aug-2017