E*TRADE Study Reveals That for Most Retail Investors, Active versus Passive Management is Not Either/Or
Majority favor a hybrid approach to their investing - rather than one consisting solely of active or passive management
- 8 percent chose a higher-cost, purely active approach that aims to beat the market.
- 31 percent chose a low-cost, purely passive approach that aims to follow the market.
- 61 percent chose a moderately-priced approach that uses passive management to track broader, more efficient segments of the market, while leveraging active management that aims to seek outperformance in narrower and less liquid segments of the market.
"As the world of investing vehicles continues to expand, retail investors are seeking the best of both worlds in weighing passive against active management," commented
- To stay ahead of the class: When considering active versus passive management, neither is necessarily the best fit for every asset class. Many investors feel passive strategies work better for more efficient and broad asset classes like domestic large-cap, while active managers may be able to add value for less liquid and narrow categories like international small-cap.
- To factor in fees: Many investors feel it's wise to understand when it makes sense to pay up for active management and when sticking to lower-cost passively-managed vehicles such as ETFs and index funds is more appropriate. As hybrid portfolios evolve, many investors are developing a better understanding of what may or may not be worth a potentially higher fee.
- To capitalize on customization: Combining active with passive management in one portfolio creates a larger world of possible solutions than focusing on one versus the other. The hybrid approach may better enable investors to build portfolios that closely align with their individual goals, risk tolerances, and time horizons.
Visit E*TRADE's Newsroom for the full Q2'16 StreetWise study results.
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About the Survey
This wave of the survey was conducted from
|If you had to choose, which of the following approaches would you be most interested in for your portfolio?|
|TOTAL||AGE 25-34||AGE 35-54||AGE: 55+|
A moderately-priced approach that combines active and passive
|A low-cost, purely passive approach that aims to follow the markets||31%||32%||29%||34%|
|A higher-cost, purely active approach that aims to beat the markets||8%||6%||9%||9%|
The information provided herein is for general informational purposes only and should not be considered investment advice. Past performance does not guarantee future results. ETFC-G
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