Greater skill of active investment managers can mean less fee revenue in a general equilibrium. Although more …-skilled managers earn more revenue than less-skilled managers, greater skill for active managers overall can imply less revenue for … their industry. Greater skill allows managers to identify mispriced securities more accurately and thereby make better …

-skilled managers produce larger expected total investment profits, and their portfolio weights correlate more highly with assets …' future returns. Becoming more skilled, however, can reduce a manager's expected profit if enough other managers also become … more skilled. The greater skill allows those managers to identify profit opportunities more accurately, but active …