The market environment of the past few years has been nearly ideal for passive investors, with strong overall returns dominated by the largest companies. But investors should not be lulled into believing that this environment will last forever. For a long-term investor, passive investing may be an important part of a portfolio — specifically in the most efficient asset classes where information is abundant and securities are generally fairly priced relative to one another, such as U.S. large cap — but we suggest that it may be best used in conjunction with active management in less efficient asset classes (including, for instance, international and emerging markets, small cap, etc.). An active investment strategy can offer significant advantages for long-term investors, and the potential higher cost is irrelevant if the net-of-fees return over time is higher.
Of course, not all active managers are alike, and thoughtful, careful manager selection can make all the difference in the success of an active investment strategy. This is where Arnerich Massena comes in. Our long-term success in selecting active investment managers is a significant differentiator in our clients’ portfolios. Let us help you avoid the pitfalls of passive investing with our world-class active manager research and selection process.
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