An article in Financial Advisor discusses two new studies: the first from PGIM Investments, which echoes what might become the conventional investment wisdom for the near future: selective active management will curtail the risks of market uncertainty and outperform passive management.
More than 500 financial advisors with at least $25 million in assets were surveyed for the study. 81% of the advisors said that active management has been made more attractive by the recent reductions in expense ratio fees. Stock market volatility continues to be a concern, as does economic slowdown, and a low-return environment. 76% of the advisors acknowledged that portfolio construction has been influenced by the pandemic as they look for ways to stay on course. And while mutual funds remain strong, 65% of advisors surveyed said they expect to turn more and more to ETFs.
In the second survey, A New Take on the Active vs. Passive Investment Debate, managing director at Morgan Stanley Wealth Management Dan Hunt notes that the current climate is exactly the kind that lends itself well to active management, with the volatile domestic market and a leaking economy as major factors. But in large-cap U.S., rely on the passive approach, says Hunt.