The Benefits of Active Management in Non-U.S. Equities
With the stock market tumble in 2008, plan sponsors questioned the effectiveness of active management compared to passive alternatives. Relative under-performance for a number of EAFE managers in 2008 prompted some U.S. plans to terminate active managers in cross border investments all together, while institutional investors still weighing the pros and cons to reevaluate the merits of active management across their plan structure. In this memo, we examine the performance of active managers in non-U.S. equities using data from InterSec's EAFE Plus Universe and illustrate that through careful manager selection, "going active" in international equity portfolios has been a beneficial pursuit for U.S. tax-exempt investors over the long term.