Over the past several years, index strategies have attracted an increasing portion of investors’ assets, and the trend shows no signs of slowing. In fact, index strategies have been so successful that some investors are concerned that active investing will eventually disappear, and that market efficiency will suffer as a result.
We believe that active investing will continue to play a significant role in the economy for many years. In this paper, we explore three primary reasons for our confidence in the long-term viability of active management.
The lasting appeal of active investing does not mean, however, that managers of conventional active equity portfolios can relax. We believe that going forward, successful active managers will focus on innovation, portfolio implementation and/or asset allocation strategies.
While the scope of active management is evolving, many investors remain committed to active investing more broadly, and active investors who adapt to the latest trends have the potential to do well. For this reason, we are optimistic about the prospects for active management.