Asset allocation more important than passive vs. active bias
Research by Momentum Global Investment Management in conjunction with Scorpio Partnership has concluded that regardless of where managers stand on the active vs. passive debate, it is asset allocation that should remain the key consideration.
“Active management tends to be more likely to deliver outperformance in less efficient asset classes such as the small cap equity space,” the report suggests.
“By contrast sustainable outperformance is more difficult to achieve in more efficient asset classes such as government bonds.”
“Passive solutions work better in mainstream asset classes. In more niche areas passive solutions can be expensive or come with hidden drawbacks. For example in mainstream asset classes such as government bonds the index can be replicated easily without structural issues. Passive investing is more problematic in areas like credit or commodities. In these areas investors need to do extensive due diligence before selecting a passive solution.”
To view the full report click here: [asset_library_tag 3863,Active vs. Passive]