Active management is not dead yet. Not by a long shot. Some 79% of professional investors and RIAs say that the current environment favors active over passive investment strategies, according to a survey released May 4 by Natixis Global Asset Management covering fund buyers in 28 nations.
“Investors are concerned that these historically low volatility levels cannot last in the face of global political and monetary policy change,” said Robert Hussey, Executive Vice President of the Institutional Services Group. “Professional fund buyers see volatility as an opportunity, and are looking to active management and alternative investments to both generate alpha and manage risk.”
A sizable majority, 74% to be exact, say they are investing in alternative investments to diversify portfolio risk.
Given the potential for greater volatility, active management will also factor into investment plans with 63% of the roughly 7,000 respondents saying paying a fund manager to watch over things is better when facing short-term market movements.
Active management is also the preferred route to gaining exposure to non-correlated asset classes (74%), accessing emerging markets (77%), generating stable income (66%), and implementing environmental, social and governance strategies within portfolios (79%).
RIAs and others give the advantage to passive investments in only one area – minimizing fees. Given the outlook for increased volatility and potentially greater dispersion, wholesale portfolio managers plan to add less than 2% to their passive allocations over the next three years, Natixis said in a six page report titled “Riding the aftershock: Wholesale portfolio managers anticipate volatility and opportunity.”
Over the past decade accommodative monetary policy had an equalizing effect on equity markets, keeping dispersion low and equally rewarding the companies with middling results alongside companies that could demonstrate meaningful earnings growth, report authors wrote.
Individual investors have increasingly turned to index-based strategies for market returns. Investors may be “turning a blind eye” to risks presented by index strategies that tend to weight sectors that may be underperforming, like commodities or in the case of the large China ETF, the iShares FTSE China ((FXI 24,02 -0,11 -0,46%), financials and real estate. Eight in ten of those in the Natixis survey said their clients have “a false sense of security about passive investments.” Some Good News For Active Money Management
Active management is not dead yet. Not by a long shot. Some 79% of professional investors and RIAs say that the current environment favors active over passive investment strategies, according to a survey released May 4 by Natixis Global Asset Management covering fund buyers in 28 nations.
“Investors are concerned that these historically low volatility levels cannot last in the face of global political and monetary policy change,” said Robert Hussey, Executive Vice President of the Institutional Services Group. “Professional fund buyers see volatility as an opportunity, and are looking to active management and alternative investments to both generate alpha and manage risk.”
A sizable majority, 74% to be exact, say they are investing in alternative investments to diversify portfolio risk.
Given the potential for greater volatility, active management will also factor into investment plans with 63% of the roughly 7,000 respondents saying paying a fund manager to watch over things is better when facing short-term market movements.
Active management is also the preferred route to gaining exposure to non-correlated asset classes (74%), accessing emerging markets (77%), generating stable income (66%), and implementing environmental, social and governance strategies within portfolios (79%).
RIAs and others give the advantage to passive investments in only one area – minimizing fees. Given the outlook for increased volatility and potentially greater dispersion, wholesale portfolio managers plan to add less than 2% to their passive allocations over the next three years, Natixis said in a six page report titled “Riding the aftershock: Wholesale portfolio managers anticipate volatility and opportunity.”
Over the past decade accommodative monetary policy had an equalizing effect on equity markets, keeping dispersion low and equally rewarding the companies with middling results alongside companies that could demonstrate meaningful earnings growth, report authors wrote.
Individual investors have increasingly turned to index-based strategies for market returns. Investors may be “turning a blind eye” to risks presented by index strategies that tend to weight sectors that may be underperforming, like commodities or in the case of the large China ETF, the iShares FTSE China ((FXI 24,02 -0,11 -0,46%), financials and real estate. Eight in ten of those in the Natixis survey said their clients have “a false sense of security about passive investments.”