We know there are many sides to the active vs passive debate, so stay tuned as we explore this topic in-depth, including a look at how the definition of active investing is changing, key aspects of performing due diligence on active managers and when to be active.
The active vs passive investing debate should long be over, but it refuses to die. While the real debate today should center on how active and passive strategies can be combined to best meet objective needs, we continue to see clickbait headlines likening the rise of passive investing to “the misuse of antibiotics” and warning of passive ETF “bubble trouble.”
The definition is changing... The purely passive investor does not exist, "passive investing” is a misnomer because deciding how, when and where to allocate involves active decision-making. Once you leave the “market” portfolio, an active decision has been made.
As financial professionals know all too well, performance matters. That’s why it’s crucial to have a thorough due diligence plan in place when selecting an active manager.
We describe four factors that can drive alpha opportunities and assess whether these "active four" are trending in favor of active management.