Active vs. Passive Investing
The debate of active management vs. passive management has been around for a long time. We believe the answer depends on what strategy you are investing in and what area you are investing in. Actively managed US large company growth funds have a more difficult time outperforming passive index funds because the universe of companies is smaller. Value, small company and international active equity managers have a better chance of outperforming because their universe of investing is broader. A good example of a broad market where active managers add value is in the fixed income market. The fixed income market consists of a large amount of issues with varying maturity dates. Over the past year roughly 90% of active fixed income managers have outperformed passive index funds.