There’s a need for a “more balanced narrative on the value of active management,” says Karen Barr, President and CEO of the Investment Adviser Association (IAA). Changing the narrative is the goal of the Active Managers Council, which was formally launched by IAA member firms in 2018.

Barr expressed her concern in her introduction to a webinar in January 2020 for independent fund directors sponsored by the Mutual Fund Directors Forum. She moderated the session, which featured presentations by Carol Geremia of MFS Investment Management, Dave Lafferty of Natixis Investment Managers and Darby Nielson of Fidelity Investments.

Industry observers have been looking “in the wrong places and at the wrong measures” to evaluate active management, Barr noted. Persistence statistics, scorecards, short-term return data and measures of market replication – which have all received extensive media coverage recently -- simply don’t get at the long-term value that active managers bring to investors.

“Investment managers aren’t hired to generate alpha on a daily basis, but rather to achieve investors’ goals over the long term,” she added. “The way that we talk about performance is misaligned with the value that we’re trying to provide investors.”

Ending that misalignment is the focus of the Active Managers Council, which is sponsored by the IAA. The Council’s mission is to foster education and thought leadership on active management. It has been active in sponsoring research on the value of active management and in communicating that value to the public, both directly and through the media. The Council has also been active on the public policy front, by dispelling misunderstandings about active management and by ensuring that policy makers remain objective in their approach to regulation.

Perhaps most importantly, the Council aims to change the narrative on active management, ending the “false dichotomy” that pits active versus passive, doing a serious disservice to investors in the process.

“Active and passive are both critically important to investors,” concluded Barr. “All investors are active investors; investing involves a wide spectrum of active decisions.”

Mutual Fund Directors Forum members can listen to a complete recording of the webinar on the Forum’s website at mfdf.org. Visit the Forum’s websitefor information on its extensive webinar program, including upcoming and archived events.

Active Managers Council members can also listen to a complete recording of the webinar in the members-only section of the Council’s website at activemanagers.com.