“Active management is a zero-sum game—for every winner, there is a loser.”
David Druley, Chairman and CEO of Cambridge Associates, explains why it is critical for institutional investors to have significant resources, networks and skill/expertise to execute an active strategy well in this current investment environment.
Key points of the article include:
- The best way for investors to continue meeting their investment goals is to construct and maintain highly diversified portfolios that stand a strong chance of generating excess returns.
- Investors must have the skill, relationships, and resources to find the best managers that deliver returns in excess of their benchmarks—or hire an investment partner who can.
- Even with two historic bull markets and passive portfolios outperforming diversified portfolios in 12 of the last 20 years, institutions with more than 15% invested in private investments bested globally invested passive portfolios, on average, by 260 basis points over the full 20-year time period ending June 30, 2016.
- Investment returns translate to real benefits for real people… including medical research, tuition assistance, investments in urban renewal, pension/retirement benefits, philanthropic investments and more. With the right decisions, investors can generate billions of opportunities to make a difference—and the wrong decisions can cost them commensurately.
- The savviest investors know that the best way to succeed is to avoid making short-term decisions that take them away from opportunities at precisely the wrong time.
Druley discussed this topic further on The Asset Management Outlook panel at Milken Institute’s Global Conference on May 2, 2017. #MIGlobal
Read the full post on LinkedIn here.