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The case (and the cost) of active management

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In this type of market, many portfolio managers can take on the genius role simply by exposing themselves to beta. After all, despite some big issues over the past decade, owning the market has been a safe bet. Concrete example: the Vanguard 500 Index Fund (VFINX), a proxy for the S&P 500, produced a compound annual growth rate (CAGR) of 15.39% over the 10 years ending August 31. This is not to be despised, especially in light of its cost. VFINX can only be owned for 14 basis points (0.14%) per year.

Vanguard founder, the late John Bogle, has often decried alpha research as a futile and expensive endeavor. For the most part, it has proven itself over the years. It’s hard to consistently beat the market. But it is not impossible. To witness it: The Parnassus Core Equity Fund (PRBLX), a large cap portfolio that beat VFINX’s performance over periods of 3, 5, 10 and 20 years. PRBLX, with $ 31 billion in assets, is America’s largest ESG-focused fund.

OK, I hear you say, PRBLX beats the index fund but at what cost? Among large-cap core mutual funds, the average expense ratio is 1.03%, well above the cost of the passive Vanguard product. PRBLX is priced lower by 84 basis points (0.84%). The question remains whether the 70bp outperformance of the Parnassus fund is justified by its outperformance. The answer, in a nutshell, seems to be “yes”.

Just compare how PRBLX has performed against its peers and against the Vanguard portfolio over the past 10 years.

PRBLX’s annual growth rate exceeds that of the Vanguard Index Fund by 33 basis points. By dividing the excess growth rate by the excess cost of PRBLX, you can get the fund recovery ratio, a measure of compensation for additional holding costs. The Parnassus fund has consistently produced positive recovery ratios, as well as positive alpha, over all the periods described below:

PRBLX recovery ratios and alpha coefficients

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Todd Ahlsten, chief investment officer of Parnassus Investment and portfolio manager of the PRBLX fund, says his fund is deliberately monitoring costs. “We want the fees to be competitive and reasonable, and believe that we offer unique value in principle and performance,” he says. “The expense ratio is 0.84% ​​for the Investor share class, although most advisors use the Institutional share class at 0.62%.”

Ahlsten’s ran the PRBLX fund for two decades and had to adjust the portfolio’s price to maintain his advantage. “Over the past 20 years, the makeup of the stock market has changed to be more tech-driven and less brick-and-mortar focused. It has changed the benchmark itself and we are actively aware of the bets we are making, ”he says. “With more government intervention and dominant secular trends, we had to become more aware of the broader market environment. “

Ahlsten and his co-director Ben Allen have responded by creating sector teams that look broadly at market drivers. The result is a portfolio with decided sectoral inclinations but which still remains strongly correlated to the market. Relative to VFINX, PRBLX’s returns indicate underweightings in consumer discretionary, utilities and energy as well as overweightings in industrials and real estate.

“We are primarily a bottom-up stock picking business,” says Ahlsten. “To outperform over a market cycle, we are investing in an artisan basket of around 40 high-quality companies. These companies, in which we invest after extensive research, have sustainable competitive advantages, offer increasingly relevant products and services and are well managed by well-motivated management teams.

“ESG has been and will be a key part of our investment process as well,” adds Ahlsten. “The end result is a high conviction, highly active, low turnover portfolio that investors can use as their core portfolio. Hence the name of the fund.

Style-wise, the returns of the Parnassus fund simulate modest exposure to the dampening effect of long- and medium-term T-bill volatility – apparently at the expense of the large-cap growth allocation – even if no bond is actually held in the portfolio.

“We don’t use too quantitative a process for low volatility stocks,” says Ahlsten. “We also do not go into high cash positions, nor do we use derivatives. We manage volatility using the same process and philosophy that we have used for years, including in 2008 when we outperformed the S&P 500 by over 14%.

For the Ahlsten team, the ESG objective makes stock selection easier. Ahlsten says: “This has been a key part of our process since the inception of the fund. For us, ESG is a quality marker. Companies that score high on environmental, social and governance characteristics generally have a culture of avant-garde, innovative management and workforce teams. This mindset is useful for improving the value of the company, which informs the stock price. ”

Significantly, ESG is also a risk management tool. Paying attention to companies that are concerned about their material and reputational risks tends to produce more predictable and positive investment results, Ahlsten says.

It is difficult to argue against the approach of Parnassus.

“Investors come to us for long-term investments over a market cycle,” says Ahlsten. “Our aim is to offer more advantages than disadvantages. Achieving this asymmetric return profile helps to argue in favor of active management. “

Brad Zigler is the editor of alternative investments at WealthManagement. Previously, he was responsible for marketing, research and training for the options market of Pacific Exchange (now NYSE Arca) and the iShares complex of exchange-traded funds.

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“Active management will have a big impact”

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Allan Gray CIO Duncan Artus sees investing as “a business of probability”. And in a world where major changes in the global economy create huge dispersions, fund managers need to be adaptable.

“At Allan Gray, we are bottom-up investors, but we always want to be on the safe side of long-term trends,” Artus said at the Allan Gray Investment Summit last week. “We want to be on the safe side of valuation extremes and economic variables. ”

These include the risk that inflation will be persistently higher in the years to come than it has been in the recent past.

“This increase in inflation, especially in the developed world, will translate into higher commodity prices in dollars,” Artus said. “This will be exacerbated by ESG (environmental, social, governance) policies increasing the cost of capital for resource companies.”

Growing inequalities
If inflation rises, it also increases the risk of greater social instability in the world and what governments might do in response. This is against the backdrop of a world already grappling with high levels of inequality exacerbated by the response to the global financial crisis.

“We have growing inequalities where people who own assets get richer and those who don’t get poorer because of QE. [quantitative easing] policies, ”Artus said. “In the future, I think there will be a lot more emphasis on policies that favor redistribution and laws that favor labor over capital.

“In South Africa, we already have a very distributive economy. If this change occurs in the developed world, it could give the government here the cover to introduce even more measures like a basic income allowance. ”

Governance and politics
The ESG impacts will also be felt much more widely according to Artus.

“When people think of ESG, they focus a lot on the ‘e’ – the environment. But I think the ‘s’ and the ‘g’ are going to become much more meaningful. Governance will not be limited to company boards, but will focus more on politics.

“The world is going to become more polarized,” Artus added. “You are going to be part of the West, or you are going to align with China. This is important for South African equity investors as we have massive direct exposure to China. ”

This includes the obvious link via Naspers / Prosus, the fact that Richemont’s growth is very much tied to Chinese wealth and that local commodity producers are heavily dependent on Chinese demand.

To be active
Given this dynamic, Artus sees fund managers under pressure to protect and grow their clients’ wealth.

“I think active management is going to have a big impact,” he said. “I think, in the scenario I sketched out, you can’t manage a benchmark portfolio and look like everyone else.”

According to him, this is an environment requiring careful stock selection.

“How do you expose yourself to this change in leadership, whether it be the unintended consequences of QE or ESG, the energy transition, inflation or what is happening in China?”

“Over the next decade, I would be underweight the tech and disruptive stocks that have been so strong over the past 10 years.”

If you think of Facebook or Amazon, these companies didn’t even exist when the IT bubble burst. We don’t know who the winners will be in the next 20 years.

“We also want to be suppliers and producers of metals that will be used in the energy transition for a long time. We also need exposure to precious metals.

This is the best way to protect yourself against inflation.

Find opportunities
“If you’re a bottom-up manager, you’re also looking for specific things like moving to omnichannel retail,” Artus added.

Here, he believes there might be an underrated opportunity at Woolworths as online sales improve and Country Road shows the potential to be a valuable omnichannel retailer.

“If you’re worried about the redistribution policies in South Africa, you could own Pepkor,” Artus added. “If social subsidies go up, it ends up in Pepkor’s first line. ”

The risk that worries him the most, however, is China. When the government can change the rules of the game without notice, investors need to be careful.

“The events of the last month and a half have brought this to the fore,” Artus said. “Everyone is going to have to think a lot more about the absolute size of Naspers / Prosus in their portfolios.

“But you don’t have to own the big stocks so heavily exposed to China, either. And BAT? It’s cheap, it has a high dividend yield in pounds and zero exposure to China. This is because its assets were nationalized by the Chinese government in the 1970s.

Duncan Artus is co-manager of the Allan Gray Balanced fund, the Allan Gray Stable fund and the Allan Gray Equity fund.

Patrick Cairns is Editor-in-Chief for South Africa at Citywire, which provides insight and information to professional investors around the world.
This article first appeared on Citywire South Africa here, and republished with permission.

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Sheer Markets launches portfolio management

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Through dedicated teamwork, innovation and industry experience, Sheer Markets’ philosophy is to work with investors to deliver a diverse and ongoing portfolio management approach in this changing investment climate. constant evolution, which will help preserve and increase investor wealth over the long term.

Understanding the importance of tailor-made solutions is the core tenet of Sheer Markets Portfolio Management, which is a unique offering based on an investor’s situation, performance goals and risk appetite. As a portfolio management client, an assigned team of specialists will provide high-level, reliable and up-to-date advice to support the complex planning and management of an effective investment strategy.

The launch of Sheer Strategies, a select number of investments in institutional grade managed accounts available to retail clients, is the first step in this comprehensive portfolio of portfolio management products.

Sheer Markets CEO Howard Carr commented:

The Sheer Markets brand stands for integrity, experience, innovation and equal market access. Through our full suite of NDF execution services, we are already providing trading products to retail investors that were previously only available to wholesale clients, and in a similar vein, our portfolio management offering will make them Institutional ranking investments available at a much lower investor entry threshold. for only 2,500 €. Our initial five professionally managed programs under the Sheer Strategies banner will facilitate a range of systematic currency and cryptocurrency trading techniques across a selection of proprietary risk settings, allowing retail and institutional investors to take advantage of the ‘leverage and determine their own investment objectives to achieve diversification. , uncorrelated returns and investment alpha.

Sheer Markets uses a proprietary classification schedule to determine the risk of each investment approach, and the five investment strategies initially available to clients domiciled in the EU are as follows:

Pure Strategy Nova: Systematic effects only. Trade G7 currencies and crosses, short term in nature with an average hold period for 10 hour positions. Medium to high risk.

Pure Orion Strategy: Systematic effects only. Trading G10 currencies and crosses, short term approach looking for opportunities for momentum and average reversion with an average hold period for 14 hour positions. Low to medium risk.

Pure Jupiter Strategy: Systematic effects only. Trade G10 currencies for the short term using seasonality models and average reversion structures with an average hold period for positions of 7 hours. Low to medium risk.

Pure Neptune Strategy: Systematic cryptocurrency. Only trades BTC, both long and short. Leverage is not used and the strategy has a long bias with an average holding period for positions of 4 days. Medium to high risk.

Pure Strategy Mercury: Systematic effects only. Trade 11 currency pairs using a short-medium trend / momentum approach with an average hold period for positions of 20 days. Low to medium risk.

Sheer Markets CEO Howard Carr continues:

“What sets Sheer Markets Portfolio Management apart from many of our peers is that all trading and investment management decisions are made in-house, and with a very competitive and transparent fee structure, this ensures the management and operation of our Sheer Strategies branded products. are fully aligned with the investor. Sheer Markets actively collaborates with its clients, and our sophisticated investment strategies and portfolio management offerings are available to a broad group of private investors with varying levels of understanding of the market, not just the wholesale sectors.

By internalizing the operations, management and decision-making of portfolio management, and drastically lowering the barrier to entry to institutional grade products, retail investors can benefit from equal access to investments and responsibility for investments.

Sheer Markets was created and licensed in 2020, with the mission of introducing a range of innovative products through the MetaTrader 4 and MetaTrader 5 platforms largely inaccessible to online traders and investors. Sheer Markets’ execution offering combines live streaming from NDF, EMFX and FX, as well as trading opportunities in cryptocurrencies, stocks, indices, commodities and hybrids, coupled with an offering tailor-made portfolio management.

For more information on the portfolio management service and Sheer strategies offered by Sheer Markets, click here.

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A Complete Guide to Portfolio Management

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What does a portfolio manager do?

Before any explanation, it is necessary to understand that the job of a portfolio manager differs from the job of a project manager. The first has the role of monitoring all the projects of the company and the factors, whether internal or external, which affect the company, thus ensuring the achievement of the strategic planning of the organization.

The project manager, on the other hand, focuses on taking charge of a single project in question, that is, he takes care of his own work and not the entire portfolio of the project. the company.

Knowing this, we can say that managing a portfolio of projects is not just about executing multiple projects simultaneously. Each of the project portfolios must be analyzed individually. Always with the objective of identifying its capacity to generate value for the company, as well as its adherence to the objectives defined in the strategic planning.

In this sense, the function of the portfolio manager is to control the progress of all projects, as well as their resources, expenses, time, deadlines, to align them with the strategic goals and objectives, to monitor whether a given project is beneficial for the organization and the file. it is not a question of identifying strategies capable of reversing this situation.

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Weigh active management in DC diets

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The argument that actively managed funds are appropriate in Defined Contribution (DC) plans has been going on for decades, and numerous excessive fee lawsuits against pension plan sponsors have pushed the needle towards the use of funds. liabilities in the investment menus of DC plans.

Now, a recent publication from the CFA Institute Research Foundation asks the question, “Is active management worth it?” The paper, titled “Defined Contribution Plans: Challenges and Opportunities for Plan Sponsors,” notes that proponents of passive management argue that active fund managers rarely have the investment skills necessary to achieve superior performance net of fees. . Supporters of active management argue the opposite.

The CFA Institute Research Foundation publication states that because passively managed funds hold portfolios of securities intended to track an index, passive fund managers need an efficient portfolio construction process to achieve their goals. He explains that the fixed costs associated with managing this process mean the manager and investors benefit from the scale of the building. The natural way for the manager to do this is to lower barriers to entry for investors by lowering fees, according to the institute.

On the other hand, explains the publication, “the central proposition for actively managed funds is that their unique research and execution enables them to add value for their investors.” However, the CFA Institute Research Foundation says that at a certain amount of assets under management (AUM), an actively managed fund would generate the same return as a passively managed fund, minus any difference in fees.

“Therefore, in order for an active manager to generate positive active returns (sometimes called ‘alpha’) for his investors, he must at some point close the fund to new investors, that is, he has what’s called a capacity constraint, ”the publication said. said. This capacity constraint, along with the research and skill of fund managers, explains why actively managed funds cost more than passive funds.

Also weighing in on the debate over active versus passive management, with a focus on Target Date Funds (TDFs) – which hold the majority of participants’ assets – Maddi Dessner, Head of Class D Global Services ‘assets at Capital Group, says cost is a target. through which the plan trustees must assess the investment managers is not the only thing to consider. She says plan trustees must also determine what investors will receive in returns net of fees. “Cost is a limiting way of looking at active versus passive management and the value that participants will receive,” she adds.

Dessner points to the Department of Labor (DOL) guidelines on fees, which say plan sponsors should think about the value members receive for the cost. She also notes that the DOL’s TDF Selection Tip Sheet recommends that plan sponsors consider which strategies are consistent with the goals and objectives of the plan and plan members.

The CFA Institute publication argues that selecting and monitoring actively managed funds is more complex and time consuming for plan sponsors. “Managers use a wide variety of approaches to conduct investment research, build portfolios and control trading costs,” the paper says. “One of the challenges of selecting active managers is understanding these approaches. The authors argue that investment committees of defined contribution plans rarely have the investment knowledge to distinguish managers, and while large promoters may have knowledgeable staff and access to consultant advice, small developers have fewer, if any, of these resources.

Dessner says the selection and monitoring of passive funds also involves rigorous due diligence for DC plan committees. Especially for TDFs, plan sponsors need to monitor the sliding path of the funds and the underlying investments.

“Additionally, Trustees cannot ignore the fact that the structure of a descent path is an active decision,” she adds. “It also produces differences in the results. Over the past five years, older participants have seen yields vary by 12% or more at a critical point in their lifecycle.

The CFA Institute publication includes the results of one of several studies on the performance of active managers, focusing on mixed managers of large US caps. Although some managers were able to add value, the average active performance achieved was negative. The institute notes that similar types of studies have been carried out for other asset classes and that the results will vary by asset class. “The lesson for sponsors is that finding qualified active managers is difficult and will likely take a long time,” he says.

To the argument that active fund managers struggle to outperform benchmarks, Dessner says a recent Morningstar study of active and passive TDFs found that their performance did not differ significantly. “The average expense ratio for our R6 share class is about 25bp higher than some of the largest passive TDF providers, but over the past decade, American Funds has outperformed some of these providers by 100. at 150 bps, annualized, net of fees. ” She adds.

Even on the core investment menu, Dessner says it’s okay for plan sponsors to include actively managed funds if they offer better net expense results than benchmarks. She says that there are significant risks associated with concentrations in particular investments, and that is what is built into passive exposures, so finding more ways to diversify from a benchmark is a good thing.

“When selecting from the main menu, participants tend not to select investments to achieve concentration risk diversification,” Dessner adds. “The option for plan sponsors is to simplify the investment menu and offer investments that will generate returns net of fees. “

The authors of the CFA Institute article recommend that a defined contribution plan committee should only select actively managed investment options if it can answer yes to the following four statements of conviction:

  • Active managers who can add value exist (after fees) in the asset class;
  • The committee can identify and hire these managers;
  • The committee can adequately monitor and, if necessary, replace poorly performing managers; and
  • The committee can educate participants on how to appropriately use these actively managed investment options in their accounts.

Dessner says it’s important for plan sponsors to make the appropriate decisions that lead to member success, not just decisions based on cost or fears of litigation. “Plan sponsors shouldn’t just think about costs,” she says. “In [the CFA Institute’s book] himself, he says the important things are costs, risks and returns, so plan sponsors need to think about the outcomes for members.

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Advisors replace active management with smart beta ETFs

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Financial professionals have stepped up their use of exchange-traded funds (ETFs) to replace actively managed funds with smart beta strategies and to reduce overall portfolio costs, according to Vaneck.

VanEck’s Sixth Smart Beta Survey, which gathered responses from 547 financial advisors in Australia, found that respondents felt that increased use of ETFs had a positive impact on their business through better monitoring of portfolio performance, increased transparency and improved performance.

The survey found that 91% of advisers used ETFs in client portfolios, up from 87% in 2020.

Of all respondents who have used ETFs, 56% use smart beta ETFs as a substitute or replacement for active management while 55% of finance professionals plan to increase their smart beta allocation over the next 12 months.

Smart Beta investment strategies follow an index that differs from the traditional market capitalization approach of selecting stocks, bonds or other assets.

Arian Neiron, Managing Director and Managing Director of VanEck for the Asia-Pacific region, said: “Unsurprisingly, strong performance is the main motivation for advisors using smart beta strategies, with better portfolio diversification, reduced volatility and Improved risk-adjusted returns, also key reasons for using smart beta ETFs.

The continued underperformance of actively managed funds, which typically charge much higher fees, also facilitates the growth of the ETF market, Neiron said.

“We also found that 75% of respondents believe smart beta strategies are going to become more prevalent in portfolios; the reason may be that the advisers are satisfied with their performance; with 99% of smart beta users happy with their strategy, ”said Neiron.

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Practice directors condemn government inaction on abuse of practice staff – management in practice

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Chiefs of staff urged the health secretary to publicly condemn the “indefensible” abuses directed against general medical staff.

In an emailed letter to Health Secretary Sajid Javid (September 9), the Institute of General Practice Management (IGPM) said that there is a “lack of central support, or the government’s public challenge to the increase in cases of abuse of people working in primary care.

“GPs, chiefs of practice and other primary care professionals share the frustrations of patients when faced with long delays for an appointment or long wait times to get to their surgery. “, reads the letter, which was co-signed by the BMA, RCGP and the NHS Confederation.

“But it’s important to remember that we are all on the same side and we all want to make sure that high quality care is provided when needed.”

The letter comes after a summer that has seen a significant increase in patient abuse against staff.

A June survey indicated that up to 75% of chiefs of staff, nurses and general practitioners suffered verbal abuse from patients during the Covid-19 vaccination campaign.

Signatories have now said the situation would be “indefensible under normal circumstances” but that in light of the pressures associated with Covid-19, the damage could be “irreversible” as staff reconsider their future in general practice.

These abuses were compounded by media coverage, in which some media “repeatedly attacked, insulted and scapegoated” general practitioners and their teams, they said.

Meanwhile, the current shortage of blood test tubes has led to further criticism of GPs for postponing testing “even though the situation is beyond their control and under national guidelines.”

They told the health secretary he must “publicly support and defend general practitioners and dedicated primary care staff against this wave of misinformation and abuse.”

The signatories added that patient care must be protected by taking care of those providing the care.

They also requested to meet with Mr. Javid to discuss the concerns described in more detail and to ensure that appropriate support is provided.


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Active income management: a better approach

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WWe hear two things every week from advisors across the country: Help me manage my risk and, for Pete’s sake, help me find an income.

In the next webcast, Active income management: a better approach, Jason Greenblath, Vice President, Senior Portfolio Manager, American Century Investments; and Sean Walker, Vice President, ETF Specialist, American Century Investments, will look at how to really extract higher returns from a bond market which, let’s face it, doesn’t offer much return if you look at it. the main clues.

For example, active management American Century Multi-Sector Income ETF (MUSI) is designed for investors looking for consistent income in a tax-efficient ETF. The team targets attractive returns throughout the market cycle while providing investors with access to a diverse set of securities opportunities, including investment grade companies, high yield companies, debt markets emerging markets and securitized bonds.

Sector allocation decisions are based on the global macroeconomic outlook, historical spreads and cross-sector valuations and are informed by the overall macro strategy and opinions of American Century’s team of sector specialists. Security selection is led by long-time industry specialists who apply bottom-up fundamental analysis to assess relative worth and creditworthiness.

In addition, active management American Century Diversified Corporate Bond ETF (NYSEArca: KORP) seeks current income with an emphasis on quality debt while dynamically allocating a portion of the portfolio to high yield. KORP adjusts the investment grade and high yield components to balance interest rate risk and credit risk. The strategy selects individual credits to seek those with strong fundamentals, reduced default risk, attractive valuations and liquidity.

Additionally, the ETF adjusts industry and time exposure as risks and opportunities arise. Up to 35% of the fund’s net assets may be invested in high yield securities or junk bonds. The fund may also invest in derivative instruments such as forward contracts and swap agreements. The weighted average portfolio duration of the fund is expected to be between three and seven years.

Financial advisors who want to learn more about yield-generating ideas can register for the Wednesday, September 8 webcast here.

Learn more at ETFtrends.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Advisors prefer active management to navigate turbulent markets: PGIM

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What would you like to know

  • Advisors allocate 62% of client assets to actively managed investments, 34% to passive strategies and 4% to cash.
  • Most respondents said that there are active, skilled equity and fixed income managers who consistently outperform their benchmarks.
  • Virtually all advisors will continue to use mutual funds over the next three years, and 65% plan to use more ETFs.

As the recovery from the pandemic continues, financial advisers of a new investigation of PGIM Investments report that they allocate 62% of client assets to actively managed investments, 34% to passive strategies and 4% to cash. They expect these proportions to stay roughly the same over the next three years.

The survey found that advisors prefer active management to achieve almost all investment goals, including:

  • Access to emerging market opportunities: 80%.
  • Protection against market downturns: 79%.
  • Provide risk-adjusted returns: 70%.
  • Reliable income generation: 70%.

It is only in the management of tax liability that a majority of advisers, 52%, preferred passive management.

“What we have discovered through our research and experience is that financial advisors continue to use a mix of assets and liabilities. [strategies] but rely more on solutions actively managed within client portfolios ”, Stuart parker, chairman and chief executive officer of PGIM Investments, said in a statement.

“The ability to generate alpha for clients, especially during times of market volatility, is critical.”

For advisors who evaluate active managers, performance matters. A large majority of those surveyed said that there are active, skilled equity and fixed income managers who consistently outperform their benchmarks. Over 80% said fee reductions make active managers more attractive than they used to be.

Escalent conducted a survey between Jan. 27 and Feb. 19 of 509 U.S. financial professionals who sell mutual funds, ETFs, or target date funds. Participants had current business volume, were between 28 and 65 years old, had a Series 6 or 7 professional license and at least three years of experience as a licensed investment professional, and had assets under management of at least $ 25 million.

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Eaton Vance Management Announces Changes to the Portfolio Management Team of Eaton Vance Short Term Diversified Income Fund

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BOSTON, September 8, 2021 / PRNewswire / – Eaton Vance Management (“EVM”), investment advisor to Eaton Vance Short Duration Diversified Income Fund (NYSE: EVG), announced that Akbar A. Causer and Federico Sequeda, CFA, both Vice-Presidents of EVM, have joined the Fund’s portfolio management team. Effective September 8, 2021, the members of the Fund’s portfolio management team are Catherine C. McDermott, Andrew Szczurowski, CFA, Eric stein, CFA, M. Causer and M. Sequeda.

About the Fund

Eaton Vance applies in-depth fundamental analysis to the active management of equity, income, alternative and multi-asset strategies. Eaton Vance’s investment teams follow proven investment principles that focus on continuous risk management, tax management (where applicable) and the pursuit of consistent long-term returns. The company’s investment capabilities span global financial markets. With a history dating back to 1924, Eaton Vance is headquartered in Boston and also maintains investment offices in new York, London, Tokyo and Singapore. For more information, visit evmanagement.com. Eaton Vance is part of Morgan Stanley Investment Management, the asset management division of Morgan Stanley.

Closed-end fund stocks often trade at a discount to their net asset value. The market price of the shares of the Fund may vary from the net asset value depending on factors affecting the supply and demand of shares, such as the distribution rates of the Fund compared to similar investments, investors’ expectations regarding future distribution changes, the clarity of the Fund’s investment strategy and return expectations and investor confidence in the underlying markets in which the Fund invests. Shares of the Fund are subject to investment risk, including the possible loss of invested capital. The Fund is not a complete investment program and you could lose money investing in it. An investment in the Fund may not be suitable for all investors. Before investing, potential investors should carefully consider the Fund’s investment objective, strategies, risks, charges and expenses.

This press release is for informational purposes only and is not intended to constitute, and does not constitute, an offer to buy or sell shares of the Fund. Additional information about the Fund, including information on the performance and characteristics of the portfolio, is available at eatonvance.com.

Statements in this press release that are not historical facts may be forward-looking statements, as defined by United States securities laws. You should exercise caution in interpreting and relying on forward-looking statements, as they are subject to uncertainties and other factors which may be beyond the control of a Fund and could cause actual results to occur. differ materially from those set forth in forward-looking statements.

SOURCE Eaton Vance Management

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www.eatonvance.com

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