Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:When Does Passive Beat Active? Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, December 8, 2011

When Does Passive Beat Active?

News summary by MFWire's editors

Active fundsters may find some comfort in Morningstar's latest thoughts on the active versus passive debate. John Rekenthaler, vice president of research, penned an analysis of the debate for the December/January issue of Morningstar Advisor magazine.

What does Rekenthaler conclude? He argues that trying to predict where active management will beat out passive "looks to be a mug's game."

"Few active mutual funds have as pure an exposure to a given asset class as does an index, so by definition a fund will struggle to keep pace with the index if the asset class finishes first over the time period," Rekenthaler wrote. "Conversely, it takes a specially incompetent or unfortunate fund not to beat the index of the last-place asset class."

Rekenthaler stresses that index selection and composition matter. He notes that the Vanguard Intermediate-Term Bond Index Fund [profile] is beating its active counterparts largely because active managers are less willing than the index to bet as heavily on longer durations and Treasuries. Between December 31, 2000 and December 31, 2010, active intermediate bond fund managers beat the Barclays Capital Aggregate Index but fell behind the Barclays Capital U.S. Government/Credit 5-10 Year Index, and large blend funds paced the S&P 500 while lagging the Russell 1000 and the Wilshire 5000

Edited by: Neil Anderson, Managing Editor


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

0.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2024: Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly




©All rights reserved to InvestmentWires, Inc. 1997-2024
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use