The seventh issue of eVALUATION, Stern’s student-run investment newsletter is out. For this issue, the editors elected to focus on the increasingly popular and ongoing contentious debate: Active vs. Passive Investing.
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Inside you will find detailed insights from industry experts who have closely watched the evolution of investment management and are strong proponents of their own field. The newsletter includes interviews with successful active investment managers, leading providers of passive investments, and renowned investment expert and author of The Index Revolution: Why Investors Should Join it Now, Charley Ellis. It also features NYU’s very own valuation expert, Professor Aswath Damodaran, and University of Notre Dame’s Professor Martijn Cremers whose research focuses on this area. In addition, the newsletter features a student investment write-up (long Hanesbrands) and a summary of recent SIMR events.
“We’re in the middle of a revolution caused by indexing.” – Jack Bogle, Vanguard founder(1)
In light of the recent rise in passive investing, over the past semester the eVALUATION team has been researching the growing trends toward passive management and the continued merits of active management. In this issue we present in-depth discussions on the “Active vs. Passive” debate. While we leave the ultimate answer to this Active vs. Passive question up to you, we strive to present detailed and multifaceted views and opinions to keep our readers well-informed of key industry trends and help you assess this topic constructively going forward.
The rise of lower cost ETFs and the shift toward passive investing has been a controversial topic for active managers facing performance challenges in recent years. According to Morningstar, more than one third of mutual fund and ETF assets are now passively managed, up from one fifth five years ago. (2) Passive funds are seeing record inflows andthe ETF momentum is expected to continue, as PwC forecasts that passive investments will reach $22.7tn by 2020. (3) This is a profound change within the industry, and in this new age of shifting investor preferences and lower cost competition, active managers will need to continue to adapt and sharpen their strengths.
We are proud to introduce the seventh issue of eVALUATION, focused on the Active vs. Passive debate, in addition to our highlighted student investment ideas and recent news from Stern’s Investment Management & Research club. We hope that you enjoy this issue and the varied perspectives on this highly debated industry topic. Finally, we would like to thank our interviewees for their time and contributions, as this would not be possible without their valuable insights.
eV Editors – Devesh, Diana, Joe & Neha
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