Blending active and passive: Analysing the key benefits of core/satellite investing
The traditional argument for index investing –such as through exchange traded funds– is based on the view that most active managers fail to beat their respective investment benchmarks more often than not. But while this may be true to some extent, it’s clear that some active managers maintain good track records over time and are favoured by some investors. Given this reality, this note demonstrates how even in cases where successful active managers can be found, passive investment strategies as part of a “core/satellite” approach can still play a useful complementary role. Indeed, this highlights a broader point: the choice between active and passive investment strategies need not always be mutually exclusive, but rather each should be seen to complement the other. To know more visit: (VIEW LINK)
Author, columnist, investment strategist and macro-economist. Previous roles at Federal Treasury, OECD, Macquarie Bank and AFR. I develop economic insights and portfolio construction strategies for BetaShares' retail and adviser clients.