I really like active management, but I also like passive management.
But which is best?
There’s only one way to find out…….fight!
OK, notwithstanding the Harry Hill school of reason, in the last couple of blogs I’ve been making the case for each type of approach in a fairly objective manner. I’ve laid out pretty good reason for each approach and why one is superior or not to the other – you can judge for yourself of course if you felt there was any bias, but I’ve tried to be pretty neutral.
And that sort of brings me to my verdict: I believe in both and neither.
This isn’t me sitting on the fence btw.
I truly believe that in any portfolio or investment approach (where we have some form of good diversification that is) a mixture between the two types of management is best.
Of course, there are always exceptions and where you have direct investment into say a commodity, bond or a company, then that choice may be different, especially if you’re making your own choice from your own research and not from an adviser or manager.
However, for me investment is about portfolios, and in that mix there should be room for investments of both types, so that in essence you can get the best of both worlds.
For example, when markets are rising, passives are great and will be a nice boost to the portfolio; whilst during more unpredictable times you want the expertise of a good fund manager to help pick out those little nuggets that will keep things on an even keel. Also, having passives will keep the overall costs of the portfolio down.
I also truly believe that there is no such thing a passive investment strategy. We’re all active investors. We all make choices, saying “yes” to some exposures and strategies and “no” to others, whether it be for risk, preference or whatever. In fact the most challenging thing in any investment route is making sure that the choices you have made are good ones – regardless of them being passives or actives.
Next time, we’ll talk a little more about how to make the right choice and Bitcoin.