In this greatly expanded second edition, Swedroe and Berkin show you how to develop an investment plan that focuses on what risks to take, and how much of them, as well as how to build a diversified portfolio. If you understand the benefits of indexing, or systematic investing, it will reinforce your commitment while increasing your knowledge. This comprehensive book is the antidote for the active managers’ siren song. If you are one of those managers, here are my suggestions for what is needed to win.Active managers persistently lag the returns of benchmarks and index funds that track them, with the excuses for underperformance recycled every year. I find it interesting that even Vanguard has to acknowledge some Active managers are better than the index.Įvery article jumping on the bandwagon that Passive makes more sense, acknowledges (statistically), that there are active managers out there who can and who do beat the index and provide alpha even after taxes and fees. ![]() As you might imagine their thesis is low fees and superior ability to pick great managers. Leave it to Vanguard to write why Active Management makes sense too. The Case for Vanguard Active Management: Solving the Low-Cost/Top-Talent Paradox. Gives five different reasons and markets when Active makes more sense.ģ. There are still some scenarios where the Hands-On Way Might Make More Sense," The Wall Street Journal (February 8, 2015) At a minimum, you need to know about this paper because everyone is talking about it.Ģ. Michael Pollock. It does bring up that nothing is free and the move to passive has ramifications we can’t yet clarify. From what I gather, the actual paper isn’t as compelling as the title. The title is one that every active manager wishes they could say, but most don’t. This paper has gained massive press coverage. Get ahold of it if you can, if not read the following link found at Bloomberg: Note: This research paper is not on the Sanford Bernstein website as it is only available to institutional clients. Written by Sanford C Bernstein’s Head of Global Quantitative and European Equity Strategy, Inigo Fraser-Jenkins. “ The Silent Road to Serfdom: Why Passive Investing is Worse Than Marxism”. Does the answer lie in the middle? I particularly enjoyed his discussion of how equities and bonds are different in this respect, and how opportunity can exist in different markets.ġ. One of the least biased articles I have read. ![]() This is a well thought out article from Zachary Karabell. Meaning the people who Active Managers can “exploit” to win the zero-sum game.ġ. To give you an idea of the style it is written in the title of Chapter 2 is “The Pool of Victims is Shrinking”. This book is an easy read and gives detail as to why active equity investing for alpha has gotten much harder and why it is almost impossible to outperform over the long run. The Incredible Shrinking Alpha: What You Can Do to Escape Its Clutches. IF YOU WANT TO UNDERSTAND WHY VANGUARD HAS BEEN RAKING IN MONEY, READ THIS PAPER! Very Importantly they present the fee differential of different products and asset classes. (One big note is that this data point is based on a 5-year time frame, meaning 2008 until 2013).ĭiscussion of Bull and Bear cycles and active managers. benchmarks with survivor bias taken out for both equity and bonds, and the factual basis for the claim that 2% of funds add Alpha that you read everywhere. Highlights include: Zero Sum game theory, performance numbers of active mutual funds vs. This is the quintessential research paper on the Pro Index (Passive) side. ![]() Kinniry Jr., CFA Todd Schlanger, CFA Joshua M. Need to get up to speed on this topic fast? This reading list will give you the pros and cons for both sides.ġ. Christopher B. We end with our thoughts on how best to sell an Active Management strategy, given the new climate marked by significant flows to Passive. In the articles and papers selected, we demonstrate both sides of the argument. Passive investment choices.Ĭonsidering that many of my clients are Active Managers, I decided to do some digging into the state of research on this topic. If you're an Active Asset Manager, Home office Analyst picking managers, an Advisor or someone with a 401(k) or IRA, you have most likely heard some form of argument on Active vs.
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