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RidgeWorth Investments' Latest White Paper Demystifies the Active versus Passive Debate Common in Large Cap Value
|By PR Newswire
|March 18, 2014 11:25 AM EDT
ATLANTA, March 18, 2014 /PRNewswire/ -- Actively managed large cap value funds gained momentum in 2013, despite steady redemptions over the past five years. Following this trend, investors should consider how extra time and energy spent selecting a skilled active manager can add notable value to their portfolios, according to a white paper recently issued by RidgeWorth Investments.
RidgeWorth's publication, "Large Cap Value Indexing Myth-Conceptions: Re-examining the Active versus Passive Management Debate," debunks popular myths regarding differences between actively managed funds and passive portfolios. The paper suggests selecting a skilled active manager may add considerable value to portfolio returns over time when compared to passive indexes and exchange-traded funds (ETFs).
"Conventional wisdom often holds that the 'average' active manager has trouble consistently beating broad market benchmarks," said Mills Riddick, CIO of Ceredex Value Advisors and senior equity portfolio manager for the RidgeWorth Large Cap Value Equity strategy. "However, an effective large cap fund manager has the potential to outperform benchmarks, and do so by a significant amount. Furthermore, active managers do not need to outperform every period to deliver stronger overall long-term performance. Rather, it is the frequency of higher returns through evolving market cycles that matters."
"Choosing a manager you trust is essential when investing," said Ashi Parikh, CEO and CIO for RidgeWorth Investments. "While, of course, no manager is going to be right 100% of the time, selecting an active manager whose record of stock-picking skills over the long-term may help to mitigate that risk," Parikh added. "On the other hand, passively managed products may offer little to no protection against market downturns, which may significantly curtail results during volatile markets." When choosing an active manager, the paper suggests screening for manager tenure, performance consistency and a reasonable expense ratio.
RidgeWorth suggests investors consider the opportunity costs associated with an indexed product, especially in an important core portfolio allocation such as large cap value. When examining cost efficiency, a small savings in fund expenses may not be warranted if a higher-priced option delivers more than that savings provides in added return. RidgeWorth believes that its research shows that top-performing, large cap value active managers have been able to demonstrate consistent stock-picking prowess, and this skill has led to reliably strong outperformance over time.
To access this white paper, visit www.ridgeworth.com/news-insights/ridgeworth-research.
About RidgeWorth Investments
RidgeWorth Investments serves as a holding company that owns interests in six investment boutiques with approximately $50.3 billion of assets under management as of December 31, 2013. RidgeWorth's investment boutiques manage a wide variety of investment disciplines across the fixed income, equity, and liquidity management asset classes. Our boutiques provide investment management services to a growing client base that includes endowments, foundations, corporations, healthcare organizations, municipalities, public funds, associations, insurance companies, labor unions and high net worth individuals. In addition, RidgeWorth serves as the investment adviser to the RidgeWorth Funds mutual fund family. RidgeWorth Investments is a trade name for RidgeWorth Capital Management, Inc., an investment adviser registered with the SEC headquartered in Atlanta. For more information about RidgeWorth, visit www.ridgeworth.com.
About the RidgeWorth Investments Research Series
This report is part of the RidgeWorth Investments Research Series, an ongoing educational program that explores various investment topics. For more information about this and other informative programs offered by RidgeWorth Investments, please visit www.ridgeworth.com or call 866-595-2470.
An investor should consider the funds' investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the RidgeWorth Funds can be found in the fund's prospectus. To obtain a prospectus, please call 888-784-3863 or visit www.ridgeworth.com. Please read the prospectus carefully before investing.
Equity securities (stocks) may be more volatile and carry more risk than other forms of investments, including investments in high grade fixed income securities. The net asset value per share of a fund will fluctuate as the value of the securities in the portfolio changes. Value based investments are subject to the risk that the broad market may not recognize their intrinsic value. All investments involve risk. There is no guarantee a specific investment strategy will be successful.
Past performance is not indicative of future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. For performance data current to the most recent month end, visit our website at www.ridgeworth.com.
© 2014 RidgeWorth Investments. RidgeWorth Investments is the trade name for RidgeWorth Capital Management, Inc., an investment adviser registered with the SEC and the adviser to the RidgeWorth Funds. RidgeWorth Funds are distributed by RidgeWorth Distributors LLC, which is not affiliated with the adviser. Collective Strength Individual Insight is a federally registered service mark of RidgeWorth Investments.
© 2014 Ceredex Value Advisors LLC is a registered investment adviser with the SEC and member of the RidgeWorth Capital Management, Inc. network of investment firms.
NOT FDIC INSURED
NO BANK GUARANTEE
MAY LOSE VALUE
SOURCE RidgeWorth Investments
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