It doesn't have to be either/or
In the absence of certainty, many are expressing a strong preference for the lower fees associated with passive management.
We'll explore four points we believe are worth considering in the very important active/passive decision:
- Passive may not be the safe fiduciary option.
Implication: Do not automatically dismiss attractive active management opportunities.
- Active management is worth considering.
Implication: Carefully consider the alternatives to passive on a case-by-case basis.
- Cap-weighted is not the only way to invest passively.
Implication: Choosing the flavor of passive is an "active" decision.
- There's no "passive" option for target date funds.
Implication: Understand your plan's target date offering, and monitor and periodically reconfirm its appropriateness.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.