Still risk in passive trades: Squawk Box Europe hosted by Stephen Sedgwick & Karen Tso Video Embed Size: 530 X 298 640 X 360 For more information go to www.cnbc.com. The information contained in this tv appearance represents SCM’s opinions, and should not be
A great deal of confusion exists today about the merits of passive investing as compared to well-researched active management. An added layer of confusion arose in March when Warren Buffett explained that 90% of his widow’s money would be invested in a low-cost S&P 500 index fund. If this summer was a football game, 15-yard personal foul penalties would be thrown everywhere as experts piled on top of that announcement.
Financial advisors and registered investment advisors feel severe pressure to throw in the towel on manager selection methodologies and accept index returns. Yet, many of these stories forget one central concept: indexes are actually inexpensive actively-managed portfolios. Every actively managed fund is an index itself.
Financial innovation in the investment business is, in our opinion, sometimes just smoke and mirrors. The recent movie The Incredible Burt Wonderstone illuminates what this smoke and mirror façade can produce. The movie portrays two magicians who have a long-running show on the Las Vegas Strip. One act of their show is much like the game of Hangman. Burt Wonderstone (played by Steve Carell) presents the trick to the audience while his side kick Anton (played by Steve Buscemi) walks up the top of the platform and prepares to put his head inside the noose. Both entertainers put cloaks on to mask their body and head. The noose is tightened for the hangman. The trapdoor of the hangman drops. Seconds later, the head covers are pulled and magically the entertainers have deceivingly traded places without the audience knowing. How magical!
Active Managers Stink? Blame These All-Too-Common Fund Flaws By Brendan Conway For more information go to www.barrons.com. The information contained in this article represents SCM’s opinions, and should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.
Each year we are reminded of the fact that active management systemically underperforms the benchmark. The scorecards come in, and the tally is drilled back into our consciousness. But has the now long-tenured debate of active versus passive offered us much in the way of new perspective over the last several decades?
William Smead Chief Executive Officer Chief Investment Officer Subscribe to the Missives Podcast Dear Fellow Investors: Morningstar did some neat fund flow analysis recently which was picked up by a column written by Mark Hulbert on MarketWatch called, “Active vs. Passive”. In it he described
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