Vanguard's Norris Says Volatility Doesn't Give Passive Investment an Advantage

The video explores the debate between passive and active investing, especially in volatile markets. It argues that for long-term investors, market fluctuations are less relevant. Active management was once thought to outperform in downturns, but this hasn't been the case. The discussion includes the potential for active management to thrive if fees are lowered and the market reaches an equilibrium between active and passive strategies. The video concludes that lower fees could enhance active management's performance.

What was the traditional belief about active management during market downturns?

• Passive investing would always outperform.

• Active managers would underperform due to high fees.

• Active managers would focus on long-term gains.

• Active managers would outperform by moving to cash.

What is the potential impact of everyone using passive investing strategies?

• Active managers will have more opportunities to outperform.

• Passive investing will become less profitable.

• The market will become less volatile.

• Active managers will cease to exist.

How can active managers improve their performance according to the discussion?

• By increasing their management fees.

• By focusing on short-term gains.

• By substantially lowering their fees.

• By investing solely in equities.

What is the current alpha opportunity in most markets compared to 20 years ago?

• It remains the same at 400 basis points.

• It has decreased to 100-150 basis points.

• It has increased to 500 basis points.

• It has become negative.

Why is it difficult to charge the same fees as 20 years ago?

• Because market volatility has decreased.

• Because the alpha opportunity has decreased.

• Because passive investing is more popular.

• Because active managers are less skilled.