FYI: Today’s infants may gasp in wonder 20 years from now at tales of how humans once were trusted to drive cars. They may also be shocked that humans once were trusted to pick stocks for investment portfolios.
The soaring popularity of “index” or “passive” mutual funds in the last few years has dealt another blow to the ranks of traditional “actively managed” funds — the ones with human portfolio managers who are supposed to ferret out the best stocks and beat the market average return.
Regards,
Ted
http://www.latimes.com/business/la-fi-investing-quarterly-active-funds-20170409-story.html
Comments
The tidal wave of mutual fund money storming away from actively managed funds and towards passively managed products certainly is a cause for concern among the actively management contingent.
So is the fact that fund fees are being reduced, that investors are becoming better informed, that the managers themselves are better prepared limiting any potential advantages, that the competition is more uniformly challenging, and that the community is numerically shrinking. Wow, that's formidable headwind!
All these are combining to make active managers perspective's significantly dimmer. But the referenced article is not written in a nasty, non-reversible trend sense. It inspires some hope. It highlights the investment strategies of a few attractive individual investors who use both active and passive components when assembling a portfolio.
I say attractive because the mixed management investment styles of those profiled are very similar to my own investment rules of engagement. It is a battle. And everyone likes to be a part of a group and not an outlier when doing battle or when making investment decisions. There is comfort in not being alone.
Although the active management community is struggling through a tough,abandon ship period, it will not totally disappear. It's needed for price discovery purposes, and because there will always be some folks who will never be satisfied with only earning average market returns. These folks covet superior returns as their guiding goal.
Tom Petruno is an excellent financial writer. I like his work. I have read his measured articles for countless years. He rarely disappoints and always includes data that is easily understood. Good for him; good for us.
Best Wishes
Enough already. Everyone knows it. Go back to "who killed marilyn monroe?" articles. It's been a whole 3 months since anyone did that.