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Earlier this year, FactSet commissioned Greenwich Associates to explore the global shift from actively managed funds to passive, index-tracking strategies. From March to May 2017, the group interviewed portfolio managers, chief investment officers, and analysts at asset management companies across the United States, Europe, and Asia. Interviews consisted of a series of quantitative and qualitative questions regarding the current challenges facing the industry and competitive strategies for client retention and fund performance against broad market benchmarks.

The resulting research explores the techniques and data sets portfolio managers are utilizing to improve performance, the key traits of successful portfolio managers, and the potential opportunities for asset managers to diversify their product suite to attract new customers.

Here’s an overview of some of the key takeaways:

  • Portfolio managers—both active and passive—believe that the shift into passive strategies will continue for many years.
  • Economic uncertainty will result in uneven growth rates and normal asset-price correlations, benefiting active managers that advantage of mispriced securities and emerging economic trends.
  • Many portfolio managers expect a bear market to be the most likely catalyst for a shift back to active, believing that actively managed portfolios will perform better in a downturn. However, empirical evidence does not support outperformance of actively managed funds during bear markets.
  • Active portfolio managers recognize that outperformance is ultimately the best way to compete with their passive counterparts.
  •  Alternative data can help active managers improve risk/return profiles, but only 28% are currently using this data.

To see more of the trends and numbers behind this research, download the full research: Competitive Strategies for Active Managers.

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