Investing tends to promote unyielding and often conflicting ideas about what works and what doesn’t. Witness the schism between those who embrace active management vs. indexers. Many use both, although some fall into one or the other camp and summarily dismiss the other. But is it wise to preemptively reject passive or active management for all of eternity? Or, maybe, is it better to keep an open mind on the off chance that the other side might come up with a useful idea every now and again?
So suggests Matthew Rice, CFA, in an recent interview with your editor. In the course of a Q&A, originally published in the December issue of Wealth Manager, Rice made a case for looking at all the options when it comes to surveying the investment possibilities. That, at least, is the guiding principle at DiMeo Schneider, a Chicago investment consultancy where Rice is a principal. As he suggests in the following interview, indexing isn’t always and forever the best choice for every asset class. The same holds true for active management.
No doubt, there are many who disagree or remain suspicious of such notions. Indeed, your editor, for one, favors betas for building multi-asset class portfolios. Nonetheless, Rice has co-authored an interesting study published earlier this year that’s worth reviewing if only to stress test one’s core beliefs. For additional perspective, take a look at our recent conversation with Rice, which begins now….