Do you know what kind of investor you are?
Brian Weinstein, head of global fixed income at Morgan Stanley (MS) - Get Report Investment Management, discussed active vs. passive investing and how investors can position their portfolios to prepare for market volatility.
In case you need a quick refresher, here's the breakdown of active versus passive investing:
Sure, so passive investing just means that we pick an Index. The Index people know is the S&P 500, that's an equity Index. In fixed income the broad index is called the Bloomberg or Barclay's Aggregate Index, and it really is the definition of the majority of the bonds in the Index. So when you passively invest you just say I won't think about what's in the box, I'll just buy the box. When you do active investing you say no, there's some parts of the box that are better than the others, and I'm going to choose to invest in the things that are going to give me a better return over time. So active investing is what we focus on at Morgan Stanley Investment Management, but passive investing has been the biggest growth in fixed income over the last few years.