State Street Global Advisors CEO says it's active management's time to shine over passive funds


Cyrus Taraporevala is president and CEO of State Street Global Advisors. An earlier version of this article implied that he was president and CEO of State Street Corp. The error has been corrected.

Cyrus Taraporevala, president and CEO of State Street Global Advisors, called the state of U.S. equities a stock picker’s market at CNBC’s Delivering Alpha conference in New York on Wednesday. As a result, Taraporevala predicts that actively managed funds will outperform their passive counterparts. SSGA especially saw value in global finance, health care and parts of the internet and technology sector. The State Street boss pointed to fixed-income, along with emerging markets, as areas that tend to benefit from hands on management compared against passive investing. In an actively managed portfolio, a manager or team will individually select the securities held, and at what weight. This is in contrast to passive strategies, which simply “own the market” by holding the same securities at the same weight as an underlying index like the S&P 500












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While passive portfolios will never perform worse than the overall market (excluding fees, although passive fees tend to be extremely low), they will also never outperform; they will hold all the market winners, but also have no choice but to also own the worst-performing stocks. A recent shift away from active and into passive investing has been driven primarily by both the lower cost and historically better performance of passive funds.



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