The coronavirus, a new pitfall for active management

Whether over the past decade or during the coronavirus crisis, active management has struggled to beat the market. A poor performance linked in part to the recurring difficulties of the “value” management style prized by many managers.

Passive management has withstood the crisis well and continues to gain market share in Europe and the United States.

No good surprise for active management. Two recent studies by S&P and Morningstar respectively reviewed the performance of active managers during the coronavirus crisis and over the past decade. In both cases, including management fees, active management struggled to beat a simple index replicating the market. This reality has not escaped the notice of investors, who are increasingly turning to passive management. However, many professionals believe that the recent period was particularly favorable to an index approach. Investors who abandon active management do so at their own risk.

Promising context for passive management