Question: Consider two open-ended mutual funds A and B managed by different managers. Statistics for these two funds are given by the Table below. For simplicity,

Consider two open-ended mutual funds A and B managed by different managers. Statistics for these two funds are given by the Table below. For simplicity, in this question, assume that the relevant benchmark market return is always zero. Therefore, if a fund delivers returns above zero consistently, it beats the market.

Fund

Assets under management (AUM)

Fee rate

Pre-fee return

Fund A	$1,000 million	0.5%	1%
Fund B	$10 million	2%	2%

Do these two managers have the skill to beat the market? Please answer "both have the skill", "only A has the skill", "only B has the skill', or "neither have the skill" .

Please justify your answer with explicit reasoning .

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