Why You Should Combine Passive and Active Investing


Don’t let the rise of passive investing obscure the fundamental advantages of diversification. In our Masters in Business interview, Sharon French explains why both the active and passive approaches can be complementary to each other in a portfolio.

French will soon take the reins at AIG’s life and retirement funds business, which manages more than $85 billion in assets. During our interview, she was Director of Beta Solutions at Oppenheimer Funds, and ran the ESG effort there also.

Her approach is to use ETFs is to create a portfolio that is anchored in low-cost, passive, indexes. But at the same time, also employs other approaches ranging from fundamental weighted to quantitative analytics. This style diversification should lead to a more balanced volatility and better risk adjusted returns.

French has spent the better part of her career on the ETF side, focusing primarily on enhanced indexes — which covers a full spectrum of non-capitalization weighted indices. She worked at Blackrock right after Larry Fink took over iShares, where she was the head of private client & institutional sales at BlackRock, working the front lines with CIOs and managers.

She is currently president and member of the Global Governance Committee for Women in ETFs and a member of the Investment Company Institute’s ETF governance committee.

Her favorite books are here; A transcript of our conversation is available here.

You can stream/download the full conversation, including the podcast extras on Apple iTunesBloombergOvercast, and Stitcher. All of our earlier podcasts on your favorite host sites can be found here.

Next week we speak with Jonathan Stein, founder and chief executive of Betterment, which has $18 billion in assets under management.

 

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