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This is a sponsored article from Schroders.
It is time we acknowledge that active investment management is more than stock selection, writes Schroders group chief executive Richard Oldfield.
Where is the familiar scepticism toward active management? That was only a few years ago, but the debate has moved on by leagues. The binary poles of active and passive are less relevant by the day.
For instance, market volatility of recent months has brought home the concentration risk bound up in broad indices, whether these are global or US. Almost three quarters of the MSCI World Index is made up of US companies, and just 10 stocks, primarily tech, comprise half of that.
What we are seeing among investors now is a more deliberate approach and a need for strategy. In Schroders’ latest Global Investor Insights Survey 2025 of professional investors globally, 80% of respondents say they are more likely to use actively-managed strategies in the next 12 months.
Investors now want to build resilience into portfolios, and they are looking to do it by diversifying across geographies, styles and asset classes. Capital is now shifting to Europe, Asia, or emerging markets.
It is also about style. Confronted with the pitfalls of an index, investors want an approach which is anticipatory or contrarian. With a backdrop of increased volatility, micro factors (e.g. individual companies’ earning resilience) are now coming to the fore. The need to look ahead is more pressing.
In this article
Growing appetite for private markets is changing the story
Aside from today’s yoyo of US policymaking, there are underlying global problems which will long outlive Trump’s presidency. One is ballooning sovereign debt. This is a major cause of fixed income market uncertainty; yields will be higher, but there will be higher structural volatility.
So where investors seek income, bonds may be the answer, or one part of it. Private debt and credit alternatives are soaring in popularity, according to our survey. They are now the most attractive assets for investors wanting income.
If a future income solution is one which offers both public and private debt together, that makes the traditional debate between active and passive fade to irrelevance. The same goes for public and private equity.
New technologies will bring the focus back to investors’ needs
Distributed ledger tech, AI, and cheaper computing are propelling us towards investment solutions that will be more sophisticated. Private investors will have tailored portfolios geared around personal goals and dates.
The rise of passive investing has been a theme of the investment industry for the past 25 years, but it has been a story shaped by the investment industry, not necessarily by what is best for investors. Now we are at a turning point.
Click here to find out how to access the potential for resilience and returns.
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This is a sponsored article from Schroders.
