Forum: The Future of Active Management
The travails of active managers in recent years have been well-chronicled. Their poor collective performance — widely attributed to the US Federal Reserve’s zero interest-rate policy (ZIRP), exceedingly low stock market volatility, and high correlations among equities — has led investors to flee actively managed funds for passive products and others to question their relevance.
Charley Ellis, CFA, in “The Rise and Fall of Performance Investing,” contends that the stock market has simply become too efficient and, for most investors, attempting to beat the market is “no longer a game worth playing.” And Vanguard founder Jack Bogle, who clearly has a dog in the fight, recently predicted that “in 25 or 30 years, [active managers will] be gone.”
Are active managers facing a true existential threat, as Ellis and Bogle suggest, or will their performance troubles abate in a post-ZIRP world, or when the next financial crisis or bear market hits? After all, it’s a common refrain among active managers that they earn their keep when markets fall, not when all stocks go up in unison. But few active managers escaped the market meltdown in 2008, and the resulting client trust deficit still remains.
To better understand the challenges facing active managers today, the industry’s response to those challenges, and the likely future state of the industry, CFA Institute is hosting an online forum as part of its Future of Finance initiative, a global effort to shape a trustworthy, forward-thinking financial industry that better serves society.
Our distinguished panel will include Michael A. Ervolini, CEO at Cabot Research; Carol W. Geremia, co-head of global distribution at MFS Investment Management; Mirtha D. Kastrapeli, vice president and senior research analyst at State Street Center for Applied Research; and Lawrence E. Kochard, CFA, CEO and CIO at the University of Virginia Investment Management Company.
The discussion will be held on Thursday, 25 June 2015. If you would like to share your perspective or pose a question to our panelists, please scroll to the bottom of this post and leave a comment. This article will serve as your anchor for the forum as the discussion will unfold below the text of this post.
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
