There are times when advisors shouldn’t prioritize fees alone. Many asset classes embrace active management due to their superior results.
Some market observers believe that investors need to go beyond relying on past performance or buying the cheapest ETF. They are now incorporating a more forensic approach that could dig deeper into company fundamentals.
“Low fees aren’t always the best value when it comes to investments or financial advice. The key to choosing wisely is to understand where investors get what they pay for—whether their fees are low or high,” according to Transamerica.
In various forms and methodologies, actively managed funds are increasingly prominent parts of the ETF landscape. That growth trajectory could last for years.
Active Management for Today's Market Challenges
Advisors are looking critically at traditional market indexes and the challenges of navigating today’s new market environment.
“Active management is well positioned to outperform passive approaches in some areas of the financial markets, including bonds and international stocks,” notes Transamerica.
Some advisors believe investors should be considering actively managed strategies, especially in the current market environment, when a more nimble manager may be better suited to navigate quickly changing conditions.
“In recent years, investors have flocked to low- and no-fee investments and providers. But there may be a downside for investors who focus only on fees when making investment decisions,” according to Transamerica.
Getting active—in terms of health benefits, this is always a good thing and doesn’t require much selling, but when it comes to active ETFs, it’s a different story. As the active versus passive management debate persists, the former is facing two hurdles it needs to overcome—beating the market and remaining un-confidential.
Advisors are showing a willingness to embrace the new fund structure, indicating that active management is evolving and that appetite for non-passive strategies remains strong.