Passive Management

A Style of management associated with mutual and exchange-traded funds (ETF) where a fund's portfolio mirrors a market index. Passive management is the opposite of active management in which a fund's manager(s) attempt to beat the market with various investing stratetiges.

Followers of passive management believe in the efficient market hypothesis. It states that at all times markets incorporate and reflect all information, rendering individual funds, which, historically, have outperformed the majority of actively managed funds.

 

For our passive mandates we are proud to be associated with firms like Dimensional Fund Advisors. Watch these video's to

learn more about Dimensional and why they are different.

Within the passive investment management category Smart beta strategies have emerged as a useful tool. These strategies retain the benefits of traditional capitalization- or market-value-weighted approaches, such as broad market exposure, diversification, liquidity, transparency, and low cost access to markets. At the same time, they have the potential to achieve results that are superior to the market returns of cap-weighted benchmarks at lower cost than active management. Said in a different way, Smart beta strategies are a way to use low cost ETF investments in a structure that allows us to take advantage of areas that have traditionally had a better risk or return profile than the general market.

For example, Academic research done by Dimensional fund advisors has identified equity and fixed income dimensions, which point to differences in expected returns. These dimensions are pervasive, persistent, and robust and can be pursued in cost effective portfolios.

 

We are focused on identifying passive managers
that give ourselves the best opportunity for success.