A work colleague was bragging that the actively managed mutual fund he selected among your employers 401(k) electives outperformed the S&P 500 over the past 3 years. The colleague (who did not take FINC 561) claims that its a great fund, that the manager is a genius and is urging you to invest in that fund as well.

However, you believe that markets are efficient. Do you take your colleagues advice? Explain your rationale by applying concepts of market efficiency learned so far in the course. Include whether the mutual funds performance violates or disproves efficient markets and why or why not?