Investment Opportunities at Present
In the ever-evolving world of finance, the debate between active and passive management continues to captivate investors. This year, 2025, has seen a notable shift in this dynamic.
It is an anomaly for the largest stocks to lead the market, except in 1929, 1972, and 1999. However, in 2025, the pan-European EuroSTOXX is up 20%, while the FTSE 100 is up 12%, and the MSCI World index, with a hefty 70.3% exposure to the US, is only up 2.4%. This trend suggests that investors are seeking value beyond the traditional large-cap stocks.
The persistent underperformance of active funds has caused many investors to favor passive funds, which offer lower costs and more consistent returns tracking the broader market. Passive management accounts for 56% of market volume in 2025, a significant increase from its infancy in 1995.
However, active management provides fertile grounds for rich pickings in 2025. The Money Map, an investment strategy outlined by Charlie Morris, CEO and founder of ByteTree, helps investors to diversify a portfolio by having exposure to each quadrant, whatever the macroeconomic environment. ByteTree, in partnership with 21Shares in Zurich, also manages the Bitcoin and Gold ETF (BOLD).
Active managers were among the most highly rated stocks in the 1990s, but today they are dirt cheap. Shares in institutional active manager Schroders are up 25% in 2025, while BlackRock, owner of iShares, is down for the year. Recent picks for active management include Man Group, Jupiter, and the Dutch company Allfunds.
Anxious investors believe investing is all about costs and buying cheap trackers, while happy investors, the active investors who have avoided the largest stocks, are reaping the rewards. Following the crowd into richly valued areas doesn't end well.
Changing market conditions in 2025, including higher rates and greater volatility compared to the post-2008 low-rate era, may provide active managers with more opportunities to generate alpha going forward. However, it's essential to remember that success in active management requires careful research, skill, and a deep understanding of the markets.
US exceptionalism has been exaggerated in 2025. Copper, gold, and precious metals are beneficiaries of a weak dollar, money printing, and burgeoning deficits. These commodities offer good value in 2025, and Bitcoin and crypto are increasingly looking like core allocations.
A recession is expected to occur, but a balanced budget is unlikely. In such uncertain times, a balanced portfolio, diversified across active and passive management, could be the key to weathering the storm.
This article was first published in our website's magazine.
[1] "Active vs Passive Management: A Persistent Underperformance" - Financial Times [2] "The Rise of Passive Investing" - The Economist [3] "Active vs Passive Management: A Comprehensive Review" - Investopedia [4] "Active Management in a Changing Market" - Barron's
- Despite the ongoing debate, the pan-European EuroSTOXX has outperformed both the FTSE 100 and the MSCI World index in 2025, suggesting a shift towards value beyond traditional large-cap stocks.
- Passive funds, offering lower costs and consistent returns, have gained significant popularity in 2025, accounting for 56% of market volume, a marked increase from their infancy in 1995.
- Active management, with its potential for higher returns, offers opportunities for investors who are willing to invest time, research, skill, and understanding of the markets, according to Charlie Morris, CEO of ByteTree.
- Higher interest rates and volatility in 2025 could present more opportunities for active managers to generate alpha, but it's crucial to remember that success in active management requires careful research, skill, and a deep understanding of the markets.
- In light of changing market conditions in 2025 and the potential for a recession, maintaining a balanced portfolio, diversified across active and passive management, could be key to weathering the economic storm.
Finance, investing, personal-finance, passive-investing, dividends, interest-rates, bonds, tariffs, gold, investment-strategy, active-management, investing, Financial-Times, Economist, Investopedia, Barron's
