In recent years, passive management has had an increasingly strong foothold, with a sharp rise in assets under management (AUM). According to PricewaterhouseCoopers Asset Management’s 2020 report, the AUM of global passive investments stood at USD 7.3 trillion as of 2012, and they are expected to grow to USD 22.7 trillion by 2020. The active versus passive debate has been raging on for years, with compelling opinions on both sides. S&P Dow Jones Indices has been publishing the SPIVA® report across regions as an independent arbiter of this debate. The latest research paper seeks to cover questions frequently raised by our readership that are not addressed in our usual publications.
- What is the trend and impact of fees on investment returns? Is it uniform across different markets?
- Are active managers in some markets more efficient than their peers in other markets? How do they fare across different geographies and across different investment styles?
- Do AUM play a role in the overall performance of active managers? If yes, is it consistent across markets?
In our most recent report, we found that over the past five years ending in 2014, active funds levied higher charges, at least double those of passive funds, regardless of where the funds were domiciled. The active management fee in the developed world witnessed a general downward trend over the same five-year period.
The active versus passive debate is ongoing, and the empirical results obtained with such reports can provide statistics that back up one’s contentions. To find out more, please download the full report.
This article was written by Utkarsh Agrawal, Senior Analyst, Research & Design, S&P BSE Indices.