Two Simple Steps Can Enhance Portfolios
From: wealthmanagement.com
The erroneous belief that active managers can’t beat their indexes has been a key driver behind a move into passive investments such as index funds and ETFs. While it’s true that data shows that active managers, on average, have beaten their benchmarks less than half the time, that’s only part of the story. Some active managers have done considerably better than average.
Morningstar and other objective sources have demonstrated that select active managers have generated higher returns than market indexes over time, with reduced volatility.
Investors can enhance their portfolios by focusing on active managers of funds that share certain qualities. Among these are low expenses, low portfolio turnover and relatively high manager tenure. We conducted an in-depth study that showed two criteria that should be included within a thorough due diligence process. Look for funds with relatively low expense ratios and investment firms whose managers invest more of their own money into the funds they manage.
