Cameron Passmore CIM, FMA, FCSI

Portfolio Manager

Benjamin Felix MBA, CFA, CFP

Associate Portfolio Manager
  • T613.237.5544 x 313
  • 1.800.230.5544
  • F613.237.5949
  • 265 Carling Avenue,
    8th Floor,
  • Ottawa, Ontario K1S 2E1

Does Active Management Work for Institutional Investors?

June 8, 2018 - 0 comments

If you’ve been following Common Sense Investing for a while, I hope you’ve accepted that individual investors should prefer plain and simple investing. Skip the costs and complexities, and you should be able to do at least as well as, if not far better than, your return-chasing peers. 

But what about those huge endowments and other institutions? Does some sort of higher-end investing still offer higher returns for them? Today, I’m going to dispel that myth with a little something I like to call the truth. 


It’s commonly assumed that institutional investors can successfully kick it up a notch compared to us common rabble. They have far more dollars and entire teams of big-brained analysts. They’ve got ready access to investment opportunities like private equity and hedge funds. And their timeline for riding out bear markets is essentially forever.  

All that said, the truth has an annoying habit of getting in the way of assumptions, especially when they’re wrong. Today, I’ll describe several studies that focus on institutional investors. They conclude the same thing other studies have for other investors: Complexity increases costs, and costs decrease average returns. 

Apparently, that’s just common sense. You know what else is? Subscribing to my ongoing Common Sense Investing insights. I hope you’ll do so today. 

By: Ben Felix with 0 comments.
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