Active Management is Alive and Well

An article in last month’s Enterprising Investor outlines some interesting insights into how active management is “alive, thriving and adding value across trillions of dollars of assets worldwide.” The author cites research showing that “focused” active managers—those specializing in certain asset classes, sectors, etc.—can outperform index funds. One example cited is that of smaller, earlier-stage […]

Has Trump Resurrected Active Management?

Hedge fund manager Dan Loeb believes the current environment is “undoubtedly better for active investing—just as active investing was considered to be on its deathbed,” according to an article on last week’s CNBC.com. Third Point’s Loeb argues that higher rates will create opportunities for active managers, “reversing the one-way trade in yields that dampened the […]

Active Investors Get a Chance to Shine

From the investor’s standpoint, a low level of unemployment isn’t necessarily good news, says a recent Bloomberg article. However, it can bode well for active versus passive investors. When more people are working, it says, “Wage growth can exceed economic growth, putting pressure on corporate profit margins. Interest rates can rise, tightening financial conditions. Inflation […]

Low Cost and Know-How Key to Active Management Success

In an interview with Morningstar, Vanguard’s Daniel Wallick shares his perspective on how investors can successfully use active management. With respect to investors becoming “a bit disillusioned” when they see the success rates of active versus passive benchmarks, Wallick argues that costs should be a primary consideration. “Lower cost funds,” Wallick says, “by and large […]

Not All Active Managers Created Equal

As investors continue to divert dollars from actively managed funds to lower-cost passively managed index funds, research conducted by two finance professors at Pace University has revealed an interesting finding, according to last week’s Wall Street Journal. The study found that diversified emerging-markets funds that are actively managed are more likely to outperform their less […]

A To-Do List for Active Managers

A new book entitled Winning at Active Management: The Essential Roles of Culture, Philosophy, and Technology, co-authored by William Priest, CEO at Epoch Investment Partners, addresses the reasons behind the difficulties active managers are facing as well as some strategies they can use to overcome them. An excerpt of the book was recently published in […]

Active Managers May Have a Fighting Chance

The number of Americans who own individual stocks has “steadily declined since the 1990s,” a situation only exacerbated by the flow of dollars into index funds. This according to a Wall Street Journal article from earlier this month. Between 2005 and 2015, says Bank of America Merrill Lynch, an average of only 37% of large-cap […]

Indexing Continues to Put the Smackdown on many Active Fund Managers

Bloomberg reports on a recent study by S&P Dow Jones Indices that found most active managers underperformed the relevant S&P benchmarks. Specifically, 66% of large-cap, 57% of mid-cap, and 72% of small-cap managers underperformed the S&P benchmarks for their categories last year. Further, over five years, 84% of large-cap managers underperformed, while 82% underperformed over […]

Sticking With the Best Alpha Generators

Barron’s profiles Dan Wiener, who runs The Independent Adviser newsletter , founded the firm Adviser Investments, and was ranked number 69 on Barron’s list of the top independent investment advisers. Wiener, whose newsletter focuses primarily on Vanguard, says “I think what people have lost sight of is: You have access to some of the best […]

Learning from Swensen’s Success at Yale

Yale’s endowment fund has performed exceptionally well under David Swensen, returning an average of 10% per year since 2005, beating all major stock indexes and all but 2 of Morningstar’s mutual fund categories. Morningstar’s John Rekenthaler suggests that this outperformance comes from Swensen’s unconventional choices, but quickly quickly parrots Swensen’s advice to individual investors: “don’t […]

Active Management: A Deeper Look at 2014

One widely reported theme of 2014 was the struggle of active fund managers, with the vast majority of S&P 500-benchmarked funds lagging the index over the year. But in a recent piece for Trust Advisor, Envestnet PNC Chief Investment Strategist Tim Clift says there’s more than meets the eye regarding the story.