Inhalt

VSV Investment Pulse: Active versus passive

Investors have been debating the merits of active versus passive (or index) investing for a while now. In VSV Investment Pulse 2022, which was conducted by Vanguard and the University of Applied Science Lucerne, we asked Swiss independent wealth managers about their current and future asset allocation in active and index investments. The full report can be downloaded here.

 

By Prof. Dr. Manfred Stüttgen
Professor for Banking, Hochschule Luzern
And Nadine Berchtold
Research Associate, Hochschule Luzern    

 

The status quo 

Looking at the asset allocation of Swiss independent wealth managers as of spring 2022, we observed that preferences differed by region and asset class. What stands out is that wealth managers on average take a more active approach when it comes to Swiss and European equities, while the breakdown between active and index products is more balanced for US equities. Meanwhile, investments in emerging markets and Asia-Pacific equities are more likely to be implemented using index strategies. Regarding fixed income investments, government bonds are more likely to be invested using index strategies, whereas corporate bond exposures tend to be more actively managed; this is especially the case for Swiss and European corporate bond investments. As for high-yield and emerging market bonds, the preference for active relative to index strategies is more balanced.  

 

 

Figure 1: How do you invest in the following markets? (active vs. passive) (as of April 2022)

 

Outlook 

When the Swiss independent wealth managers were asked about their plans for their portfolios in the future, it became apparent that for most asset classes, they did not intend to significantly change their investment choice between active and index strategies. As Figure 2 shows, as of April, Swiss independent wealth managers broadly expected to maintain their balance between active and index strategies going forward. One notable exception was in Swiss equities, where 24% of wealth managers planned to increase their use of active products to access this market. In fixed income, wealth managers said they may move slightly more towards index strategies for Swiss, US and European government bonds, while their implementation of corporate bond exposures was unlikely to change significantly. 

 

 

Figure 2: How will your investment change in the future? (more active, no change or more index) (as of April 2022)

 

Looking ahead, it remains to be seen whether these preferences for active relative to index strategies across different asset classes and markets will persist as central banks globally raise interest rates to combat broad-based inflation. In the next VSV Investment Pulse in spring 2023, we will learn whether Swiss independent wealth managers have been able to alter their active/index allocations as they had planned, or they have changed their plans as market conditions continue to evolve. 

 

 

Biographies

Manfred Stüttgen, Dr. oec., is a Professor for Banking at the Lucerne University of Applied Sciences. He has been a senior manager in the financial services industry for more than 20 years. His latest book titled «Nachhaltig investieren. Grundlagen – Strategien – Umsetzung» has just been published with NZZ Libro.

Nadine Berchtold has been working as a research associate at the Institute of Financial Services Zug IFZ at the Lucerne School of Business since 2021. She has many years of professional experience at Swiss retail banks and most recently worked as a business consultant. She received her Master's degree in Banking & Finance and is currently pursuing her PhD.