When should investors consider an alternative to passive investing?
January 2010
Geoff Warren, Ph.D. Senior Lecturer, Australian National University
Don Ezra Co-Chair, Global Consulting - Russell Investments
In the investing arena, "active versus passive" is a perennial subject of debate. But all too often the debate is narrowly focused on comparing passive investments with the average returns achieved by active equity managers.
In this paper the authors broaden the "active versus passive" debate by presenting a framework for a more comprehensive consideration of alternatives to passively replicating a standard capitalization-weighted index in any particular asset class.
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Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
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