Whether it’s better to entrust your money to a human or to stick it in a fund that mirrors the overall market is a longstanding question for investors.
Actively-managed funds were up 2.25% at the end of April, according to the data, while passively managed funds were up just 2.2% and the S&P rose 1.9%.
That’s a pretty rare scenario in recent years.
Since the financial crisis, when most investors saw losses no matter how their funds were managed, they have been placing their trust in the indexes — which also happen to be much cheaper.
It’s unclear what sparked the switch toward actively-managed funds this year, but it could have to do with choppiness of US stocks recently (meaning significant swings in stock prices, both up and down, that ultimately result in no real price movement).
Or maybe investors are anticipating a market downturn.
In a recent episode of Wall Street Week, host Gary Kaminsky, a Morgan Stanley senior advisor, said he believes that indexing “is truly dead” and that “this is the time for active management” — particularly as the Fed looks to raise interest rates.
It looks like investors might agree.
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