Name the betas first. Run the return past market, size, momentum and quality before crediting skill. Whatever survives the lens is the only part worth an active fee. In this deck 3.1 of the 4 points were exposures, not decisions.

Beta is rentable. A factor exposure costs index-fund money, around 0.2 pct a year. Skill prices at active money, 1.8 and up. Paying 1.8 for a return that is mostly rentable beta is paying a tailor to sell you a uniform.

The residual is a claim, not a verdict. A 0.9 leftover on ten years of data sits inside the noise band. Luck and skill print the same number over a decade. The fee prints every single year, in cash, regardless.