REASoNS FoR
CHooSING
ACTIVE EQUITY
Choosing whether to invest actively or passively is a
crucial part of equity investment. Andrew Pyne explains
why active equity is the best choice in the current market.
Bermuda reinsurance companies are maturing and beginning to invest in various asset
classes beyond fixed income. The recent market declines are presenting an opportunity for
insurers to allocate to equities as an alternative to riskier asset classes.
One key question with equity investing is whether to invest actively or passively via
exchange-traded funds (ETFs) or other indexed products. The extreme sell-off in the fourth
quarter of 2008 did little to settle this debate as, on average, active managers failed to meet
the expectations of delivering capital preservation in the quarter. Frustrated, many investors
are tempted to capitulate within the equity space and go passive.
However, it is worth reflecting on the fact that all good investment decisions require a
forward-looking thesis, and we believe there are five key reasons why active management
is poised to succeed.
Bermuda Re/insurance . June 2009 29
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68