Active Produces Over Longer Term

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    DALBAR Inc.’s analysis of active and passive investing shows no clear winner. Over the longer term, active investments produced better results, reflecting the tendency for investors to remain invested for longer periods. Shorter term results show passive investments ahead, driven in part by the unexpected post-election run-up in the markets. The explanations for why active investments caught up with the superior investment statistics of the passive funds include better investor retention during market downturns, asset allocation, and capital preservation strategies of active investments. It concludes that the choice of active or passive investing should be based largely on the needs and preferences of the investor and the cost of providing asset allocation and capital preservation strategies that are not available in passive funds.