Barron’s revisited the debate between active and passive portfolio management with it’s conclusion revealed in the article’s title; Go Active for Bonds, but Index Your Stocks. This is an important issue for market participants to explore and the revisit every so often.

The article works through different market segments looking at where outperformance from active management is most likely to come from. Ultimately there is no single answer to this debate that can be correct for all investors but the framing of this as solely being about performance is incomplete.

A post at The Capital Spectator titled You Can’t Avoid Asset Allocation…Even if You Try included the following;

This is less about hitting home runs vs. avoiding high-risk bets with low odds for success.

To the extent that thought rings true it opens the discussion to include managing a portfolio’s volatility, perhaps its yield and other attributes beyond price appreciation.

All advisory firms have clients that cannot emotionally endure the normal ups and downs of the stock market cycle. Holding on to market cap weighted index funds no matter what may not be ideal for these clients.

All advisory firms have clients that are ahead of where they need to be in relation to their lifestyle and spending needs who may want to focus on preserving wealth. Do people in this situation need 50, 60 or 70% in broad based index funds?

Showing Page 1 of 2