Since the rise of passively managed equity funds, investors are able to select their investment from an ever-growing basket of index products. Active fund managers find themselves sailing against the wind in endeavoring to beat the market. However, gaining an edge through research and selective stock picking continuous to define the value added of active fund management. Depending on the market efficiency, stock selection has a varying value potential. The effectivity of research is expected to negatively correlate with the level of market efficiency. Since not all markets and actors within them are exposed to the same quantity and quality of information flows, some markets tend to be more attractive to active fund management than others.

The authors have based their study on six different market characteristics and investigated their implications on the performance of active fund managers relative to a respective passively managed benchmark fund. Concretely, the following two research questions have been answered: 1. Are active equity fund managers able to consistently outperform a passively managed fund operating within the same market? 2. What market conditions provide the most favorable prerequisites for active fund management?

1. Active fund managers have been able to generate alpha relative to a passively managed fund operating within the same market environment between 2006 and 2015. 2. Based on the historical data examined, an Emerging Markets, Large-Cap, high volatility dispersion environment provides the most attractive prerequisites for active fund management. 3. One can, based on the computation of the cumulative binomial probability and within the framework of this study, assume that in Advanced Economies, Large-Cap and high volatility dispersion markets, outperformance over two consecutive periods is highly unlikely based on only luck. 4. The fact that no perfectly negative correlation between the alphas of both five-year periods has been founds supports the assumption that the markets observed in this study are no perfectly efficient and allow for long-term outperformance to be achieved. Isolated from the sample size and the market distortions, this result would lead the authors to at least partially reject the EMH within the framework of this study.