Thoughts on the Active vs Passive Debate

With the strong growth in index funds and exchange traded funds (ETFs) in the Australian marketplace in recent years, debate is again swirling on the benefits of active vs. passive investment management. Some commentators have suggested that index-oriented investments are merely for “dumb” investors, who have no real skills in picking mispriced securities likely to outperm the market. If this were to be true, it would follow that these investors are leaving money on the table as by either investing in the development of these skills – or hiring talented active managers – they could produce better returns. It has been suggested that over the very long run, “sensible investing” in “quality” stocks “will beat an index”. How true is this? (spoiler alert: the evidence suggests this is not true!). For more click the link: (VIEW LINK)


David Bassanese
Chief Economist
BetaShares

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.

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