Principal Global Perspectives
Investment managers from around the world give their diverse perspectives on domestic trends and global dynamics that impact your clients' portfolios.
The Wisdom of Staying Active in an Outcome-Oriented Investment World
As the demographic profile of the U.S. and other developed countries continues to gray, we hear much about the importance and benefits of "staying active" — both physically and mentally.
Highlights: Increasingly, investors are seeking managers that can help them achieve desired outcomes (not benchmarks) and investment solutions (not products). This paper explores which management solution — active or passive — is most beneficial in an outcome-oriented investment world.
- Advocates of active management strongly believe that talented active asset managers can outperform market indices by leveraging informational advantages such as fundamental research and macroeconomic insights.
- Active managers that outperform over time tend to focus on: less efficient market segments, strong, sustainable investment processes, and an understanding of what drives active outperformance.
- Passive management starts from a belief that markets are largely efficient and that the potential returns from capturing any inefficiencies will be more than offset by costs and risks.
- For the investor focused on achieving a "real world" outcome, using entirely passive strategies that primarily concentrate on delivering beta won't necessarily get them to their goal.
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