Active management is a “public good” that ensures market prices are informative and prevents passive investments from misdirecting capital towards the firms that least deserve it, the firm has argued.
Pimco has also claimed passive management is significantly less successful than active investing when it comes to bond markets, in a new report weighting into the active-vs-passive debate.
The firm said the “general presumption” actively managed funds underperformed passive peers was wrong.
Instead, Pimco’s research found actively managed bond funds often outperformed their passive peers, standing in stark contrast to active equity funds who often underperformed.
The research found 63% of actively managed bond funds beat their passively-managed counterparts over the last five years, with 81% of active high-yield funds outperforming.
Over the same period, only 43% of active equity mutual funds outperformed their passive peers.
The April report is titled ‘Bonds are different: Active versus passive in 12 points’, and names a team including Pimco’s global head of client analytics Jamil Baz and James Moore, head of the investment solutions group.
The findings come as flows into passive funds are steadily increasing, particularly in the US.
