March 7, 2017
2016 was a terrible year for the performance of active stock pickers. According to Bank of America Merrill Lynch, 81% of US Large Cap active funds underperformed their benchmark1. Although we doubt that stock pickers will continue to underperform quite as badly as they did last year, investors seem to be waking up to the inherent performance problems for traditional active managers. It is difficult for every stock picker to outperform when there are so many stock picking funds and so few managers willing to take sizeable risks within their portfolios.
We are not stock pickers at RBA. We have never made a claim to be able to differentiate stock A from stock B, and will never make such a claim. Rather, our performance is based on meaningful macro positions based on asset allocation, size, style, geography, quality, and other market segments.
Pactive® investing, the active management of passive investments like ETFs, is RBA’s specialty. The growing breadth and depth of the ETF market leads us to believe that RBA is uniquely positioned to combine the most important aspects of both passive and active management.