Beyond answering the question ‘active or passive?’, investors should be asking what is the significance of the ‘active or passive’ debate for today’s quickly evolving investment landscape? Does the question still matter?
Steve Jobs was the greatest aggregator of applied ideas in our time. Great innovator, yeah sure, that too. But what strikes me was his ability to take multiple things, somehow related but seemingly disparate, and combine them into something new.
With all of the excitement and noisy positioning around Newcits, hopes for broad adoption and strong inflows are sky high. But don’t confuse motion with progress. Without an evolutionary leap beyond dependence on an outmoded asset allocation framework, this whole thing is going nowhere in a big way.
For many, “the market” is the S&P 500. Nearly a trillion dollars are invested “passively” so as to emulate its performance and exposures while 3.5 trillion are benchmarked to it.
Thank you Larry Fink (and you too Rob Kapito) [respectively CEO and President of BlackRock]. That takes a huge weight off of our collective shoulders. Purchasing iShares has gone a long way to sorting out one of the age old debates of our industry.
As fund strategies become increasingly complex, selection processes must continuously innovate to stay ahead of the curve. Traditional methods of style analysis are helpful in understanding the drivers of performance and the historic positioning of funds.
In the recent history of the asset management industry, few topics have been as strongly contested as style analysis. The uses and misuses of the concept and tools associated with it continue to have serious implications for how managers are rated and selected.