Passively Active Investing – A Five Year Test

Authors

  • Jeffry Haber LaPenta School of Business, Iona College

DOI:

https://doi.org/10.33423/jabe.v22i2.2802

Keywords:

Business, Economics, passive investing, active investing, ETF, passive vs active investing

Abstract

This paper took five years of the Council on Foundations-Commonfund study of Foundations and using the average asset allocation replaced the active managers with ETFs. The ETFs comprised the “replacement portfolio.” Over the five years the active portfolio outperformed the replacement portfolio in four of the five years. The five-year return of the actively managed portfolio was 8.1% versus 4.8% for the replacement portfolio. The ETFs chosen that replaced the managers were similar strategies and chosen based on having a low expense ratio. No review of past performance was done. During the five years poorly performing ETFs were not replaced.

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Published

2020-05-25

How to Cite

Haber, J. (2020). Passively Active Investing – A Five Year Test. Journal of Applied Business and Economics, 22(2). https://doi.org/10.33423/jabe.v22i2.2802

Issue

Section

Articles