Yale’s Actively Managed Fund Performance Waning

The majority of the Yale University endowment fund is invested with active managers but, if you compare its returns to low-cost active strategies rather than to passive indices, “Yale’s active managers don’t look so special,” writes Bloomberg’s Nir Kaissar. In its recently released 2016 annual report, the article says the esteemed university’s endowment rebutted “fee […]

Does Passive Investing Resemble Marxism?

According to a team at Goldman Sachs, says an article in this month’s Bloomberg, the rise of passive investing has the effect of “rewarding corporate directors more equally than the fundamental performance of their respective businesses might warrant.” In other words, the move toward passive funds may be leading to a rise in increased correlation […]

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 […]

Active vs. Passive Results Linked to Market Cycles

Fees contribute heavily to the variance in performance among active and passive fund managers. A recent article in Investment News says that, according to Morningstar data, “higher fees have the biggest impact on performance,” with the largest variance existing in large-cap stock strategies. The data also shows that the divergence worsens as the time period […]

Passive Investors Should Avoid these Three Mistakes

While data supports the widespread belief that passive (or index) and ETF investing offer consistently competitive returns, a recent article in Money magazine advises investors to avoid three common mistakes when choosing this route: Assuming all index funds are cheap: Index funds are generally able to charge lower fees since they simply buy the stocks or […]

The Passive Investing Tsunami in ETFs Continues

Investments have been shifting from actively managed funds to passively managed exchange-traded funds (ETFs) for a while now, but the Brexit vote and impending U.S. presidential election have fueled the migration even more. According to a recent CNBC article, the month of May saw an $18.7 billion exodus from actively managed U.S. equity funds and […]