Active vs. Passive Management Debate Rises Again
on Jan 21, 2011
We’ve been asked to address the evergreen debate of active management vs. passive management with several clients of late. Why? Many firms with actively-managed mutual funds are experiencing challenges in specific parts of their product lineups (e.g., emerging markets, domestic large cap, etc.), leaving Sales and Marketing execs to answer:
- How should our wholesalers handle the discussion with an advisor who is using (or considering) index products?
- How can we counter an advisor’s move toward passive vehicles in our print/online messages?
Over the next week, we’ll use the blog to cover some of the answers we’ve come up with, including:
- The one question wholesalers should ask advisors who say they use passively-managed products
- The underlying complexity of investment indices
- The sometimes imperfect construction of indexed investments
We’ll also cite some of the better research-driven arguments we’ve seen that can help distributors of actively-managed products with this challenge. Stay tuned…