When it comes to evaluating the success of equity portfolios or constructing a traditional passive investment strategy, the go-to instrument has usually been the market capitalization-weighted index.
The first edition of Morningstar’s European Active/Passive Barometer shows the extent to which active managers in the region have underperformed their passive peers in recent years, suggesting the active-management industry must contend not only with high costs but with poor returns too.
Factor investing has gained enormous traction in recent years as a transparent and low-cost way to exploit widely-acknowledged sources of market-excess returns, so-called risk premia.