Active vs. Passive Investing
For active management to acquire sufficient alpha to eclipse passive, a paradigm shift driven by new technologies and new methods is required. That's where Ensemble Active Management (EAM) comes in.
Most active equity funds do not underperform for lack of stock-picking skill. Rather the investment industry incentivizes them to manage business risk at the expense of long-term portfolio performance.
Enterprising Investor's most popular posts of the year include contributions from Mark J. Higgins, CFA, CFP, Larry Cao, CFA, Michinori Kanokogi, CFA, and Yoshimasa Satoh, CFA, among others.
Does it make sense to reframe the active vs. passive debate? Perhaps the question — active or passive? — is not the right one to ask.
"Neither the Financial Analysts as a whole nor the investment funds as a whole can expect to ‘beat the market,’ because in a significant sense they (or you) are the market."
What effect has passive investing, including ETFs and index-tracking mutual funds, had on the US stock market?
Beating a passive benchmark is hard. And that's true for both reindeer and people.
Actively managed strategies should have a place at the core of well-designed retirement plans.
If active managers cannot add value, then passive is the preferred position, not the other way around.
Actively managed funds can serve plan participants well.