Serving San Francisco and the East Bay

FWSF Hosts Lively Debate on Active vs. Passive Investing

FWSF Event, February 15  |  Offices of Robert Half, Oakland, CA

By Laurel Engbretson

On Thursday, February 15th, FWSF hosted a lively East Bay Industry Leadership Series event on the debate between active and passive investing. The event was held over breakfast at the offices of Robert Half in Oakland. The debate featured Blackrock Smart Beta Senior Strategist Holly Framsted representing the passive side, and Dodge & Cox Client Portfolio Manager Hallie Marshall representing the active side. FWSF Board Member and VP of Programs Sue Mazzetti moderated the debate, and East Bay Co-Chair Minako Steel provided inspiring opening remarks, sharing her personal journey with FWSF and how the event related to FWSF’s mission.

Panel

The subject of the event was well timed given the recent volatility in the stock market and subsequent barrage of think pieces on failing ETFs. Framsted’s main argument was that passive investing is the least expensive way to get the best exposure possible, and that active managers rarely outperform passive returns enough to cover the fees they charge. Conversely, Marshall argued that the human element of active management is crucial to avoiding certain risks that exist in the indexes, and that active managers are able to take advantage of opportunities in markets not covered by passive products. Ultimately, both sides agreed that there are merits to having both active and passive funds represented in personal portfolios.

Framsted and Marshall demystified the differences between active and passive investing, and provided insights to help attendees better manage their personal portfolios and better serve their clients. The key takeaways were:

  • Where there are fewer people investing in a market, there’s a better chance for active to outperform passive,
  • It is important to understand the benchmark that funds are being evaluated against, and
  • The cost of fees and tax efficiency matter.
  • Successful active managers have:
    • large percentages of the portfolio that are different than the index,
    • low fees and expenses,
    • low turnover,
    • high risk avoidance,
    • evidence of firmwide focus and core competencies, and
    • skin in the game with their clients.

More on the speakers’ backgrounds here. Coming up next is FWSF’s International Women's Day Event: #Pressforprogress – Advancing Women in Finance on Thursday, March 8th at Golden Gate University in San Francisco. Please register to join us! And on March 13, New Winds in the Financial Services Industry: Legal, Regulatory, and Technology Developments — and the Road Ahead. More

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FWSF has other exciting events coming up. Check out our Events Calendar  https://financialwomensf.org/events/.

Also, we are always looking for attendees who want to provide a summary of the event. If you volunteer, you can attend free of charge. Contact Anne Evers, VP MarComm, if interested: anne@aeversco.com

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