Passive Investing in Active ETFs

When it comes to choosing between active and passive strategies, Morningstar analyst Jose Garcia Zarate asks - why not have both in one ETF?

Jose Garcia Zarate 30 October, 2014 | 9:51AM
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This article is part of the Morningstar's Guide to Active vs Passive Investing. Click here for our edit on how the experts use the tools at their fingertips, finding out whether you prefer one to the other and examining how to blend active and passive investing for profit.

The active versus passive investing debate can be rather heated at times, with supporters of either side vehemently defending their case with a battery of statistics and analyses. However, once the key arguments are made, proponents of each side readily admit that this is not a “black or white” debate, but one where there are positive aspects to consider in both investing philosophies.

Indeed, even the most ardent proponent of passive investing would readily admit that there are active managers that do a good job, some even with a fairly high degree of consistency. The problem is finding them. Meanwhile, defenders of active investing express appreciation for some of the properties of passive investment vehicles such as exchange traded funds (ETFs). For example, they value their flexibility and the democratising effect they have by affording all investors easy access to asset classes which were previously out of bounds but to a few.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
PIMCO Sterling Short Maturity ETF102.69 GBP-0.01Rating
PIMCO USD Short Mat ETF101.10 USD-0.11Rating

About Author

Jose Garcia Zarate

Jose Garcia Zarate  is Associate Director of Passive Strategies Research for Morningstar Europe