In recent years, passive investing through low-cost ETFs has surged in popularity. However, there are times when an active management approach may better serve investors navigating changing market cycles.
The Passive Investing Boom
Passive ETFs simply track a market index, like the S&P 500. They provide broad diversification and low costs but move up and down with the market winds. During the past decade’s bull run, passive ETFs have delivered strong returns for many investors.
The Potential Benefits of Active Management
Active managers select individual stocks and bonds based on research and make tactical allocation changes. While more expensive, they attempt to outperform benchmarks through security selection and adjustment to evolving conditions.
Just like rowing a boat when the winds die down, active management strives to keep making progress regardless of market currents. This flexible approach can prove valuable in shifting cycles.
Achieving the Best of Both Worlds
At iWealth, we recognize the merits of both passive and active investing. Our portfolios include ETFs for core exposure and diversification. However, we also utilize select active managers aiming to enhance returns during more volatile periods.
The Key is Proper Implementation
More than the investments themselves, proper implementation based on each client’s needs and goals is most crucial. We can help navigate which approach makes sense for you given your time horizon, risk tolerance and market outlook through our financial planning process.
Focus on the Destination
In sailing or rowing, what matters is reaching your destination. We keep your long-term retirement plan firmly in sight and adapt along the way. Contact us today to start the conversation on maximizing your chances of investment success.
