PLANADVISER - May/June 2020 - 28
investment-oriented
A Case for Both
The merits of passive vs. active management
" I
t's almost like religion or politics: If someone is firmly
on one side of the fence, you'll never talk them over to
the other side, " says Jim Sampson, director of retirement
advisory services with Hilb Group Retirement Services in
Warwick, Rhode Island. He refers to the decades-old debate
over the merits of active vs. passive management of investment
options in defined contribution (DC) retirement plans.
When active management is successful, it can add to the
returns of passive funds in the broad market-or cushion
losses when markets are in free-fall, such as the COVID-19-induced
drop in world stock prices this February and March.
There are managers that can be relied on for consistent
market-beating performance, but they are rare, and a choice
gone wrong can be a costly proposition for a plan's participants.
In its " 2019 Active Management Review, " Wilshire
Consulting reports that, among managers of large core U.S.
equity portfolios, the median manager fell short of its benchmark
by 0.72% annually for the five years then ended.
" For obvious reasons, it's impossible for investors as a
whole-and therefore for the average investor or speculator-
to do better than the general market, " said Benjamin Graham,
the patron saint of investment managers, to an audience of
investors in mid-November 1963. He also observed that most
of the professionally managed investment funds of the day
failed to beat the market benchmarks. However, he added,
" I do believe it is possible for a minority of investors to get
significantly better results than the average. "
SPIVA Scorecard Results
Nearly 60 years on, in spite of all the brainpower, and financial
and computational resources, thrown at the problem
of investment management, reliably superior investment
management is still scarce. A research team at Standard &
Poor's Dow Jones Indices has compiled the results of investment
managers the world over for 18 years and dutifully
reported the results-mostly dismal-in its SPIVA [S&P
28 | planadviser.com May-June 2020
Art by Sam D'Orazio
http://www.planadviser.com
PLANADVISER - May/June 2020
Table of Contents for the Digital Edition of PLANADVISER - May/June 2020
2020 PLANADVISER DCIO Survey
All That Goes Into a Practice
Compliance When It's Tough
A Case For Both
The Alternative Workplace
Damage Control in a Downturn
An Uptick in Customer Arbitration?
Client Relationship Summary
Evaluating Reg BI Compliance
PLANADVISER - May/June 2020 - Cover1
PLANADVISER - May/June 2020 - Cover2
PLANADVISER - May/June 2020 - 1
PLANADVISER - May/June 2020 - 2
PLANADVISER - May/June 2020 - 3
PLANADVISER - May/June 2020 - 4
PLANADVISER - May/June 2020 - 5
PLANADVISER - May/June 2020 - 6
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PLANADVISER - May/June 2020 - 8
PLANADVISER - May/June 2020 - 9
PLANADVISER - May/June 2020 - 10
PLANADVISER - May/June 2020 - 11
PLANADVISER - May/June 2020 - 2020 PLANADVISER DCIO Survey
PLANADVISER - May/June 2020 - 13
PLANADVISER - May/June 2020 - 14
PLANADVISER - May/June 2020 - 15
PLANADVISER - May/June 2020 - 16
PLANADVISER - May/June 2020 - 17
PLANADVISER - May/June 2020 - 18
PLANADVISER - May/June 2020 - 19
PLANADVISER - May/June 2020 - All That Goes Into a Practice
PLANADVISER - May/June 2020 - 21
PLANADVISER - May/June 2020 - 22
PLANADVISER - May/June 2020 - 23
PLANADVISER - May/June 2020 - Compliance When It's Tough
PLANADVISER - May/June 2020 - 25
PLANADVISER - May/June 2020 - 26
PLANADVISER - May/June 2020 - 27
PLANADVISER - May/June 2020 - A Case For Both
PLANADVISER - May/June 2020 - 29
PLANADVISER - May/June 2020 - The Alternative Workplace
PLANADVISER - May/June 2020 - 31
PLANADVISER - May/June 2020 - 32
PLANADVISER - May/June 2020 - 33
PLANADVISER - May/June 2020 - Damage Control in a Downturn
PLANADVISER - May/June 2020 - 35
PLANADVISER - May/June 2020 - 36
PLANADVISER - May/June 2020 - An Uptick in Customer Arbitration?
PLANADVISER - May/June 2020 - Client Relationship Summary
PLANADVISER - May/June 2020 - Evaluating Reg BI Compliance
PLANADVISER - May/June 2020 - 40
PLANADVISER - May/June 2020 - Cover3
PLANADVISER - May/June 2020 - Cover4
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