The seemingly never-ending debate on passive vs. active investment management is beginning to annoy me. The discussion is one-dimensional and, at times, completely derailed. I shall be the first to admit that the long-only industry has not covered itself in glory in recent years. Nor has large parts of the alternative investment management industry for that matter. It is nevertheless the wrong discussion to have. Much more about this later, but let’s begin elsewhere.

I wrote a letter back in October of last year called When Career Risk Reigns (see here). More recently Jeremy Grantham of GMO published a letter called Investing in a Low-Growth World. The two letters address the same painful subject – how do investors get the most out of a low return environment and what returns can they realistically expect?

When I re-read my own letter from last October a couple of weeks ago after having read Jeremy’s take on the subject, I felt as if there were still some important aspects left untouched. I will deal with at least some of those issues in this month’s letter.


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