subscribe to our newsletter sign up
Why it's time to forget 'active versus passive'

Why it's time to forget 'active versus passive'

Stock market

The endless debate between indexing and active management is the investment community's version of the 'climate wars' being waged in politics, says QIC – and it is just as unproductive.

Australian institutional investment firm QIC has weighed into the perennial 'active versus passive debate' in investment circles, likening the argument to the 'climate wars' in federal politics.

QIC, a primarily active fund manager servicing super funds and other institutional investors, argued that active and passive strategies are complementary rather than "at logger-heads".

In a new paper titled Active management: skill, breadth and flexibility drives outperformance across investment cycles, QIC said investors should consider changing market conditions when selecting investment strategies.

The paper also pointed out that active investing is more about quality than quantity, and fixed income active management rewards good management by companies.

QIC director for research and strategy Katrina King said, "We are passionate advocates for active investing, but that doesn’t mean that we turn up our noses at passive investing."

"It does mean, though, that based on findings from decades of investment research, there is compelling evidence to support the proposition that markets go through periods of inefficiency where they vary from fundamental value.

"By doing so, they create opportunities for active investors to outperform benchmarks by intelligently exploiting desired risks and avoiding undesired ones," Ms King said.

 

Why it's time to forget 'active versus passive'
nestegg logo
Promoted Content
Recommended by Spike Native Network
Anonymous - A decline in cryptocurrency would even be beneficial for as money flows from one market to another.....
The Property Treasur... - Large amounts of this debt can never be repaid. Sell now or miss out forever.....
Dr Terry Dwyer, Dwye... - You don't need to go to Harvard and do a PhD in economics as I did to know that investors will likely cut and run in a rush to the exit. Pity the RBA.......
David Williams - So basically, the Reserve Bank is saying that the investment property market is an accident waiting to happen. Bring it on! First homebuyers have.......