Is “Active/Passive” another term for “Alpha/Beta”? Not quite.
Apr 24th, 2008 | Filed under: Portable Alpha & Alpha/Beta SeparationIn December, we told you about plans for a new series of mutual funds constructed by combining active and passive components (see posting). Boston-based FundQuest had always been content to provide the plumbing for the mutual fund industry - manager selection, back office support, marketing services and sales support to financial advisors. But the firm announced last week that it has finally launched its first mutual fund based on these ideas- called ”ActivePassive Portfolios” (see sales brochure).
While this sounds like an oxymoron, it’s a great example of alpha/beta separation extending slowly, but surely, into the retail marketplace. As a sort of pre-packaged alpha-beta solution, it reminds us of the Janus institutional offering launched last year (see related posting).
Here’s what they say about the “optimal” ratio for the offering:
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If active contains a large amount of passive, then why even buy any active? Just buy passive on a commodity basis and move on. Bill Miller’s a great example of the speciousness of active.