PT  - JOURNAL ARTICLE
AU  - Michael W. Crook
TI  - An Equity Portfolio Framework for Combining<br/>Active Management and Index-Based Implementation
AID  - 10.3905/jii.2014.5.1.038
DP  - 2014 May 31
TA  - The Journal of Index Investing
PG  - 38--44
VI  - 5
IP  - 1
4099  - https://pm-research.com/content/5/1/38.short
4100  - https://pm-research.com/content/5/1/38.full
AB  - The proliferation of liquid, transparent, and inexpensive index-based implementation means that nearly all types of investors, individual and institutional, face a persistent portfolio implementation question regarding the allocation between active managers and index-based strategies.Placing active risk from active fund management in the same framework of uncertainty that asset allocators utilize for other portfolio decisions brings to the active versus passive debate a surprising and enlightening answer that does not match typical discourse on the matter. Instead of a binary, “all or none” answer, reasonable (and even optimistic or pessimistic) expectations for active management imply a balanced implementation approach. Only extreme assumptions (e.g., very positive or negative levels of active return, very short or long time horizons) indicate a binary choice.TOPICS: Mutual funds/passive investing/indexing, portfolio construction, equity portfolio management