Stock picking looks easy, but the numbers proven not. S&P Global reported that a year later, 73% of active managers performed poorly. Five years later, 95.5% of active managers missed the result. 15 years later, no one has won.
That won’t change that, said Charles Ellis, an experienced investment industry figure. In fact, The growth of passive capital Ellis believes this will cause some in the industry to worry about killing active management businesses, but it is right for dynamic managers to work hard to find an advantage in the market.
“The number of people employed as actively managed has been rising and our talent in the field is overloaded, as long as it’s fun and high-paying, you can make money, you can make money, you can make money,” Ellis said in this week’s “ETF Edge at CNBC ” said the above.
ETF industry expert Dave Nadig agrees Active managers won’t disappear. “We just got the best year, and it’s a positive inflow we’ve ever had,” he said on ETF Edge.
Active ETF Their winning streak continued to bring investors’ money in January. Still, the good time for active fund flows cannot be compared with the behemoths of index funds and ETF flows. “It’s not that there are people who think that active management shouldn’t exist, but that the vast majority of the streams come from fairly unskilled individual investors entering big indexes and large target data funds,” Nadiger added.
Ellis first made financial marks by creating consulting group Greenwich Associates and later on the board of directors of The Vanguard Group, a low-cost index fund giant, who fears as ETFs grow. . “What you have to really affirm is the increase in available ETFs and steadily lowering the fees charged,” he told CNBC’s Bob Pisani.
But Ellis’ new book is called “Rethinking Investment, a short guide to very long-term investments”, he said, success brings some new investor danger. “You have to worry about the sales staff having a lot more ETFs than buyers and how they are too professional and too narrow,” he said. Ellis is particularly concerned with leveraged ETFs, “so you get explosive upside potential. , but it also has explosive disadvantages.”
Ellis believes that investors must look for “the ETF that works best for you and the job you want to accomplish.”
Nadiger pointed out Technology has become a huge equalizer In the market: Everyone has it, which means it is difficult to gain an advantage over other traders who have the same technology or similar technology. “Active management is possible and you will never find it ahead of time,” he said.
“Ironically, the reason for the proactive managers to perform poorly is that they are good at what they are trying to do, and they cancel each other,” Ellis said. With the computing power and quantitative models, these models now have access to stocks, Like playing poker, all the cards faced,” he added.
