Much of the debate about active vs. passive management hinges on performance and cost especially after the past few years where we have seen passive management outperform active managers.

According to a report by Morningstar the data showed that roughly 55% of active managers failed to beat their respective benchmarks in 2015. The graphic shows some of the differences between Active and Passive management.

On the performance side, the low volatility environment that we have experienced over the past several years has contributed to the outperformance of Passive funds as Active funds have not been able to take advantage of swings in the market. While there is still a gap in terms of fees, there has definitely been some compression given the flow of funds into passive management.

While one can make an argument for one or the other, there are areas where active management typically makes more sense. If we look at Emerging Market equities for instance, there is some level of information inefficiency vs. the domestic equity market. This can provide an active manager that is intimately familiar with that particular market the upper hand vs. a passive manager.

Not all managers are created equal and careful due diligence must be done. The best plan is to find a strategy that works for you and gives you comfort in navigating through the bumps in the road.

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