The hidden risks of going passive
Passive management is often seen as a low cost, low governance way to invest. While this may be true in a narrow sense, we think it would be a mistake to believe that it is a low risk route to success or that it offers a ‘set-and-forget’ approach. We would argue that the most important investment decisions are unavoidably active and that there are hidden risks to indexbased investment approaches. Moreover, there is evidence that some active managers can add value. This article looks at these and other issues that investors need to consider when deciding whether or not to go passive.
The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.