The Active-Passive Debate Continues: Choose Your Risk

Over the last 20 years, investor interest in passive index funds has grown substantially as a simple, tax-efficient and often cost-efficient means to achieve market-like returns with lower risk.

As practitioners of constructing multi-asset class investment portfolios, we are often asked why we would choose active strategies over passive when implementing a prescribed asset allocation. Our steadfast approach to selecting investment strategies is simple: we seek the highest return potential for a given risk tolerance at the lowest possible cost. We follow this philosophy wherever it leads, be it active or passive. Additionally, we take a long-term view that is based on deep due diligence and does not rely on past performance.

Through our collective experience in selecting managers and building portfolios, we are firm believers that there is no one-size-fits-all approach when it comes to active versus passive investing.

FOR AN IN-DEPTH LOOK

The Active-Passive Debate Continues: Choose Your Risk

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For definitions of indexes used in this publication, please refer to pnc.com/indexdefinitions.

The PNC Financial Services Group, Inc. (“PNC”) provides investment and wealth management, fiduciary services, FDIC-insured banking products and services, and lending of funds through its subsidiary, PNC Bank, National Association (“PNC Bank”), which is a Member FDIC, and provides specific fiduciary and agency services through PNC Delaware Trust Company or PNC Ohio Trust Company. This report is furnished for the use of PNC and its clients and does not constitute the provision of investment advice to any person. It is not prepared with respect to the specific investment objectives, financial situation, or particular needs of any specific person. Use of this report is dependent upon the judgment and analysis applied by duly authorized investment personnel who consider a client’s individual account circumstances. Persons reading this report should consult with their PNC account representative regarding the appropriateness of investing in any securities or adopting any investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. The information contained in this report was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy, timeliness, or completeness by PNC. The information contained in this report and the opinions expressed herein are subject to change without notice. Past performance is no guarantee of future results. Neither the information in this report nor any opinion expressed herein constitutes an offer to buy or sell, nor a recommendation to buy or sell, any security or financial instrument. Accounts managed by PNC and its affiliates may take positions from time to time in securities recommended and followed by PNC affiliates. PNC does not provide legal, tax, or accounting advice unless, with respect to tax advice, PNC Bank has entered into a written tax services agreement. PNC does not provide services in any jurisdiction in which it is not authorized to conduct business. PNC Bank is not registered as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”). Securities are not bank deposits, nor are they backed or guaranteed by PNC or any of its affiliates, and are not issued by, insured by, guaranteed by, or obligations of the FDIC or the Federal Reserve Board. Securities involve investment risks, including possible loss of principal.