CFA Institute Member Survey Finds Crisis Unlikely To Favor A Return Into Active Strategies

CFA Institute, the global association of investment management professionals, surveyed its global membership to analyze the effects of the current economic crisis caused by the coronavirus pandemic on the economy, the financial markets, and the investment management industry. The survey found that the plurality of respondents (42%) felt that it was unlikely that the crisis would reverse the steady shift into passive investment vehicles from active investing, while 31% thought it would.

“Many in our industry have been predicting a reversal of the tilt towards passive strategies and saw this pandemic moment as a potential tipping point. Yet the jury is still out on whether this crisis will bring increased flows into active strategies,” said Margaret Franklin, CFA, President and CEO of CFA Institute. “At CFA Institute, we believe that portfolios should be structured to meet the client's needs and that active and passive strategies both play an essential role in that regard.”

Earlier this year, according to Morningstar, inflows into passive investments led to a milestone event in which the assets of U.S. index-based equity mutual funds and ETFs surpassed actively managed for the first time.

“In our member survey, a significant proportion of professionals believe a shift back to active investing strategies is unlikely, which could indicate there are deeper foundational shifts in the industry and public perception that the crisis is not altering,” said Olivier Fines, CFA, Head of Advocacy EMEA for CFA Institute.

The full membership survey, which will be released at a later date, explored:

• The economic situation and the potential recovery;
• The market impact on volatility, liquidity and price formation;
• The interventionism of governments and central banks;
• The regulatory response;
• An overview of ethics in times of crisis;
• The impact of the crisis on the asset management business model and the role of finance;
• Whether the crisis is changing anything to the active versus passive debate;
• And a preliminary analysis of members’ employment situation.

The survey was fielded to the global membership of CFA Institute across all regions and jurisdictions where the organization has representation. The survey was sent on 14 April 2020 and closed on 24 April 2020. A total of 167,312 individuals received an invitation to participate. Of those, 13,278 provided a valid answer, for a total response rate of 8%. The margin of error was +/-0.8%.