What financial advisers need to know about active vs index-based ETFs

Consider a hypothetical scenario. An adviser hires an active manager for part of their investment allocation and over the next 12 months, they underperform their benchmark by 10%. What should be the response? This exact same scenario happened in 2023 between two different indexes with the same label and targeting the same universe. Figure 1 – What's in a Name? Annual Returns for U.S. Large Cap Value Indexes Source: Morningstar.  Past performance is no guarantee of future results. It is not possible to invest directly in an index The Russell 1000 Value Index and S&P 500 Value ...