Active and Passive Investments in Portfolio Construction

This white paper presents findings on how financial advisors approach portfolio construction using active and passive investment strategies. It outlines the survey conducted among financial professionals to understand their preferences and practices in managing client portfolios. A significant portion of respondents, 60%, reported that they directly construct and manage their clients' portfolios, while others utilize a combination of in-house and external resources. The paper details the preferences for active management in various asset classes, such as US equities and taxable fixed income, while also noting a preference for passive management in government fixed income. Additionally, it highlights the tools and research advisors rely on, with a majority using both firm-provided and third-party resources. The findings indicate that advisors generally adopt a balanced approach to active and passive management, with a focus on investment performance and cost considerations when making investment decisions. The paper aims to enhance understanding among advisors regarding the effective use of these investment strategies.