FYI: I enjoy endurance racing. There’s a lot of training leading up to the race, and over the years, I’ve had all kinds of training partners: fast, slow, energetic, less energetic, type A, type B, reliable, and unreliable.
A training partner who can “smooth the ride” is imperative. I need a partner who understands that my goal is to train (not overtrain) for the race. Good partners push each other, but they also help each other recognize their limits.
The same mindset can be applied to combining active and passive funds. Active funds offer the chance of outperformance—but also the chance of underperformance. Even if a portfolio is an outperformer over the long run, it will experience periods of underperformance. Those intermittent setbacks may tempt you to withdraw assets or abandon your long-term strategy.
In racing, the upside of excessive training is potentially finishing a few spots higher than normal. The downside is potentially injuring yourself and not being able to race at all. Finding the right balance is the key. And the same holds true for investing.
Regards,
Ted
https://vanguardblog.com/2017/12/28/passive-funds-can-smooth-the-ride-of-an-active-portfolio/
