Research to Help Choose Between Active or Passive Investing

A new research paper by Vanguard provides a framework for the decision between active and passive investing, according to an article on the company’s website. The paper intends to help the decision-making process by “enabling investors to think more explicitly about their expectations and the risks they’re willing to accept.” Here are some variables the paper cited as important for investors to consider: Gross alpha expectation—the “ability to achieve successful outcomes through skill in selecting an active manager”; Cost of active management—”low cost is the most effective quantitative factor an investor can use to improve the chance of success;” Active […]