The battle between stock-picking active and index-based passive management has been raging for years, but in 2016 the momentum was all on the side of passive managers. BlackRock, Vanguard, and State Street occupy the top spots on the AUM tables, each passively managing trillions of dollars. Meanwhile, traditional stock-picking active managers have been hemorrhaging assets.
According to Morningstar research in their Asset Management Quarterly (1Q 2017), U.S. passive mutual funds added $492bn in 2016, whereas active managers have shed $204bn. These numbers are for open-ended mutual funds and don’t include ETFs or the shift in institutional assets, where the same trends are underway.
By now the arguments for and against picking stocks and indexing are well documented.
At Swan Global Investments, our take on the whole passive-versus-active debate is a bit different. It doesn’t matter. Active or passive: it doesn’t matter.
Dive into this engaging paper to learn why, and more importantly discover what may be overlooked in the broader passive vs. active debate.