Hope Springs Eternal

I really hope that 2015 will be The Year Of Active Management. Because 2014 was supposed to be only it didn’t work out that way. Instead, it was the worst year for stock picking mutual fund managers in three decades, with only 10 percent exceeding their benchmarks (that’s a 90% rate of failure, in case you’re keeping track).

But I think a healthy market environment needs good active management and a lot more managers doing well. It’s part of what makes markets function.

The good news, according to Investment News, is that financial advisors haven’t given up on the hope that the managers they select will be able to win…

According to the InvestmentNews Outlook 2015 survey of 380 advisers, 73% believe that active management will outperform passive management in the year ahead.

That sounds encouraging for active managers at first blush. But then you read the article and the premise behind advisor belief in active is that the fund managers can hold cash and the market may go down. Not a word about choosing the right portfolio or finding the best names to own.

“Good active managers have the ability to manage risk,” said Dan Jacoby, chief investment officer at Stratos Wealth Partners. “In an essentially straight up market, cash will be a drag on performance, if you’re holding 5% or 10%…But in periods of increased volatility or even a sideways market, good managers will be able to take advantage with cash.”



Someone tell Mr. Jacoby that there were three major dips in the market this year for the S&P 500 – in January, August and October – averaging 6% declines. Didn’t help. If anything, the gap between the field and the index widened on each successive recovery. Craig Lazarra of S&P Dow Jones Indexes has more on this topic here: Don’t Confuse Me With Facts (Indexology).

Maybe this year those “managers with cash” will be able to take advantage of volatility. Didn’t happen in 2014.

Case for active management gets stronger every day as stocks power ahead (Investment News)

Read Also:

Investment: Loser’s Game (Financial Times)

Don’t Confuse Me With Facts (Indexology)


This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. blazing trader review commented on Sep 23

    … [Trackback]

    […] Here you can find 50341 more Info to that Topic: thereformedbroker.com/2015/01/02/hope-springs-eternal/ […]

  2. Software Regression commented on Dec 02

    … [Trackback]

    […] There you will find 88268 more Information to that Topic: thereformedbroker.com/2015/01/02/hope-springs-eternal/ […]

  3. influencer marketing strategy commented on Dec 12

    … [Trackback]

    […] Read More Information here on that Topic: thereformedbroker.com/2015/01/02/hope-springs-eternal/ […]