A view on the market movements between April 1, 2023, and March 31, 2024, shows that it is fair to say that this period was a period in which active fund managers could have shown their asset selection and timing skills since the markets were driven by a number of different factors. Each of these factors could have caused a major market downturn on their own. There were a lot of geopolitical tensions around the globe beside the war in Ukraine, which showed that democratic states are more vulnerable than one may think. Also, there were economic factors which burdened

It’s fair to say that the time period between April 1, 2023, and March 31, 2024, was a period in which active fund managers could have shown their asset selection and timing skills since the markets were driven by a number of different factors. Each of these factors could have caused a major market downturn on their own. There were a lot of geopolitical tensions around the globe beside the war in Ukraine, which showed that democratic states are more vulnerable than one may think. Also, there were economic factors which burdened the expectations of investors, such as China’s failure

We are now seeing a high news flow with regard to active ETFs. Conversely, the market share of these products in Europe is by all measures quite low. So why should a fund promoter think about using the ETF wrapper? Obviously, the assets under management in active ETFs are growing at a high pace but this is caused by the low basis rather than by massive inflows. This means the current high growth rate can’t be seen as reason for an active fund manager to move into the segment of active ETFs—especially since the inflows into active ETFs are currently

The analysis of the number of actively managed mutual funds and ETFs which were able to outperform their respective fund manager benchmarks depends on various factors. One of these factors is the market, which is chosen for the analysis, since some markets are considered as very efficient, hence it might be hard for active managers to generate an outperformance compared to their fund manager benchmarks after costs. A classification which is seen as natural habitat for active management is Equity Emerging Markets Global since emerging markets are considered in general as not efficient as developed markets like the U.S. stock

Introduction The past performance of a mutual fund is no indicator of future performance. But the past relative performance of an actively managed mutual fund or ETF compared to its fund manager benchmark shows if the respective fund manager was able to fulfill the marketing promise of an outperformance compared to the fund manager benchmark. This means such an analysis verifies if the fund was worth the higher fees for active management or if the investor would have been better off by simply buying the benchmark via a passive product such as an ETF. The analysis of the performance of

It’s fair to say that 2020 was a year like no investor has experienced before, even looking back to the Great Depression or World Wars I and II. The year began with fears of a possible war between North Korea and the U.S., an upcoming trade war between the U.S. and China, and a possible hard Brexit. In a normal year, these geopolitical tensions would have put enough pressure on the markets to cause a major downturn. But in mid-February, the coronavirus, which had previously been seen as a local problem in China, was detected in an increasing number of

Despite the deteriorating situation with regard to the COVID-19 pandemic, December 2020 was another positive month for the European fund industry since the promoters of mutual funds (+€99.1 bn) and ETFs (+€23.5 bn) enjoyed inflows. The high level of inflows was surprising since there were some uncertainties around the outcome of the presidential election in the US and a possible hard Brexit. In addition, investors fear a second coronavirus lockdown-induced economic downturn in Europe. Despite these fears, investors bought into risky assets as long-term funds enjoyed estimated net inflows of €90.6 bn, while money market products had estimated inflows of

Larry Fink is opening a new front in the passive investment war on fund management. His firm, BlackRock, will sell exchange-traded funds using its own customized fixed-income indexes – and slash fees. It’s a formula the money manager with $5.4 trillion of assets has used in equities to eat stock pickers’ lunch. For an industry with little growth, the casualties of this latest assault may be widespread. Low cost and ample liquidity have made ETFs wildly popular for everyone from retail investors to hedge funds. Most of the action has been in equities, though. They represent nearly 80 percent of

As markets have grown steadily more efficient in recent decades, it has become more difficult – and expensive – for fund managers to deliver excess returns relative to benchmarks, or “alpha”. Even though investment fund flows into passive strategies have accelerated steadily in recent years, active strategies still account for fully 70% of the $15 trillion in U.S. mutual funds. But active and passive are not the only choices. We are also seeing a booming trade in “smart beta” – an imprecisely defined cluster of rules-based strategies that avoid traditional cap-weighted index construction and seek profits amid market factors and

Jake Moeller argues that the benefits of the active funds industry need to be articulated more strongly by its exponents. The active versus passive fund debate evokes considerable passion among investors and analysts alike. If you type the topic into an Internet search engine, you can find yourself surfing for many hours garnering interesting views and opinions on the subject, ranging from serious and controlled academic studies to more anecdotal takes. Perhaps somewhat surprisingly, the subject also gets a lot of coverage in social media, with performance data and news items often commented on and redistributed with as much gusto

In discussions about whether active or passive funds are the better choice for an investor, performance statistics are often used to show that active management is a loser’s game, since the majority of active managers are not able to beat their benchmark after costs. Although this argument is probably right and despite the fact some active managers are able to produce consistently superior returns, this headline view doesn’t give all the reasons to prefer one fund over another. From my point of view it is important to look beyond the headline numbers to understand if one investment vehicle has a