As we all know, exchange-traded funds (ETFs) have increasingly become the hot menu item, attracting a lot of money away from actively-managed funds such as mutual funds. But don't discount active management just yet! There's still plenty of room in your portfolio for this type of investment.
Consider the following:
1. First-Mover Advantage
Active management gives us the ability to act swiftly and strategically, with the surgical skill of a highly-trained team of Special Forces. It allows us to push out of the starting blocks much faster.
As active managers, we closely monitor key indicators and macroeconomic themes such as PMI (the Purchasing Manager's Index), which we've written about many times, and negative real interest rates. These indicators, among other factors, often serve as the signals we're looking for.
2. Explicit and Tacit Knowledge
Some people have book smarts (explicit knowledge), while others have street smarts (tacit knowledge). Active management… Read More …