Active or Passive? How about the best of both worlds
The introduction of traditional passive funds allowed investors to receive ‘market’ exposure, which was ultimately what most portfolios were benchmarked against, at a fraction of the cost of active funds.
Passive funds aim to track the performance of an index. However, most traditional indices, such as the S&P/ASX 200 Index or the MSCI World Index, are designed to weight their securities according to their market capitalisation, or size, which can result in a portfolio with high concentration and momentum biases.
Some investors seek to combine the benefits of active and passive investing with the aim of achieving enhanced results compared to the market while maintaining the low cost and systematic benefits of passive investing.
Enter Smart Beta
Click the button below to subscribe and will have free unlimited access for a limited time to full article and all other articles on the site.
You will also be able to comment on articles on Good Returns.