NEW YORK (TheStreet) -- Financial advisors may be sending a mixed message when it comes to active vs. passive investing. When asked what would be the best way for a mid-career person to invest for retirement, most advisors (42%) said index funds. Just 18% believed actively managed mutual funds were the way to go, according to a recent Bloomberg Markets survey of advisors and money managers.
But are these the recommendations you’re hearing from your financial advisor? Perhaps not, according to the results of another study.
"More than half of advisors have not shifted their relative mix of actively managed and passively managed solutions in the past year," says research issued by Practical Perspectives, an independent consulting and research firm. The report reveals that while advisors are embracing low-cost passive investing, active management remains a major component of the investment solutions offered to clients. In fact, 80% of the advisors surveyed by the firm admitted "significant or moderate" use of active management investments, particularly actively managed mutual funds.
"Advisors still perceive active management as the preferred option in several equity and fixed income asset classes including specialty equities, international, emerging markets, small cap, high yield and strategic income," the report adds.
But this "tactical" use of active management in what are believed to be markets with "alpha" opportunity doesn’t hold up, according to research conducted by S&P Dow Jones Indices. The S&P Indices vs. Active (SPIVA) analysis compares S&P benchmarks to corresponding actively managed mutual funds.