Editor's Note
There's nothing like a little market volatility to stoke the fires of the old active vs. passive debate. And it's been a wild ride lately. That, coupled with the fact that every year the lines between ''active'' and ''passive'' become ever more blurred, makes this a particularly poignant issue. Could it be the last hurrah of the old active vs. passive debate? This issue is pretty much ALL about active vs. passive, from this note all the way through funnyman Brad Zigler's Curmudgeon column. Kicking it off are Howard Present and Ron Santangelo with an interesting twist on active investing. They say that by quant-indexing baskets of active managers, you might actually be able to generate some positive alpha, something you can't do by buying and holding the group. Jane Li and Ruhan Inanoglu follow with a blow-by-blow analysis of active vs. passive. The key metric of their research is differentiating what they call ''real alpha'' from ''exotic beta.'' Next up is a very detailed comparison of Vanguard's active and passive funds. And you thought Vanguard was an index shop! Speaking of Vanguard, John Bogle returns to these pages with a look at why dividends are the key source of long-term returns … and why they are missing from most mutual fund returns today. (Hint: Think expenses.) Meanwhile, Professor Haslem et al. weigh in with an old-school look across all S&P 500 funds. Are there differences among managers or is it ALL about cost? Russell's Kelly Haughton questions how emerging markets stocks are currently categorized, while S&P's David Blitzer questions whether active actually outperforms indexed in the emerging markets asset category. Bringing us home, as always, is Brad Zigler with an irreverent—some might even say snide—look at the subject of active passivity. It was fun, this active vs. passive thing. We hope you enjoy this last salute to the great debates of yore.
Jim Wiandt |
