Active vs. Passive Investing With CalSTRS' Chris Ailman

Chris Ailman discusses the shift towards passive equity investment, questioning the value of active management due to its inability to consistently outperform indexes. He highlights the importance of cost-effectiveness and suggests that asset management fees need to be reduced. Ailman also explores hedge fund strategies like global macro and trend following for diversification, and considers smart beta as a supplement to passive strategies.

What is one of the main reasons Chris Ailman prefers passive equity over active management?

• Increased volatility

• Better market predictions

• Lower cost and fees

• Higher returns in the short term

According to Chris Ailman, what is a significant challenge for active managers?

• Lack of market knowledge

• High fees reducing net returns

• Inability to invest in diverse assets

• Over-reliance on technology

What does Chris Ailman suggest about the future of asset management fees?

• They need to be compressed across all asset classes

• They will likely increase due to market demands

• They should remain the same to maintain service quality

• They are irrelevant to investment performance

Which two hedge fund strategies does Chris Ailman find appealing for diversification?

• Arbitrage and short selling

• Global macro and trend following

• Quantitative analysis and technical analysis

• Value investing and growth investing

What is a potential benefit of smart beta strategies according to the discussion?

• They guarantee higher returns than passive strategies

• They eliminate the need for diversification

• They are simpler to implement than traditional index funds

• They offer a cost-effective way to enhance passive investments