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Letter to the Editor, Bloomberg: Perpetuating a Flawed Narrative

Letter to the Editor, Bloomberg: Perpetuating a Flawed Narrative

May 22, 2020

To the Editor:

Matt Gilbert’s May 22, 2020, op-ed – Stock Pickers Should Be Winning, They’re Not – perpetuates a flawed narrative that does investors a great disservice by using a short-term assessment of performance to undermine the value of active management.

Investors are frequently counselled to take a long-term view on investing and criticized for making emotional, knee-jerk investment decisions. Focusing on the performance of a single month or quarter encourages exactly the wrong behavior.

Both active and passive and the broad spectrum of strategies these encompass play an important role in helping investors meet their goals and objectives. Certain outcomes can only be achieved with active management, others cannot be met by passive alone. Active management enables investors to navigate complexity, customize portfolios, better manage risk, invest with their values, capitalize on specific skills or profit from market inefficiencies. Passive management helps to reduce costs, especially in more efficient market segments.

Our Active Managers Council’s recent white paper, “A More Balanced Narrative: Setting the Record Straight on Active Management,” discusses this in greater detail. Our paper lays out ways that investors can put performance reports, such as SPIVA, in the proper context.

Karen Barr
President & CEO
Investment Adviser Association
Washington, DC

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