Active Investing: The Case for a High Conviction Approach

Shutterstock photo

By Arthur P. Steinmetz, President and Chief Investment Officer

Our firm believes that to win, one must be different. Bold. In the world of asset management, being bold is being a high conviction, active investor with a global perspective and the ability to distinguish between intended and unintended risks. As it happens, these are precisely the characteristics that, according to a growing body of research, have consistently outperformed not only passive investments, but other types of active strategies, as well.


In the perennial debate over the merits of active and passive investing, the passive camp argues that the average actively managed fund trails the average passive fund over the long term. There’s more to the story—a lot more.

The fact is that not all active management styles are created equal. A certain type of high conviction, highly active manager, dubbed “diversified stock pickers” in a groundbreaking series of academic studies, has a clear record of outperforming both their benchmarks and associated passive strategies over a range of time frames, even net of fees. At the same time, the supposed benefits of passive strategies don’t always hold up. Indeed, some of the ingrained issues of many passive strategies often prevent them from accurately reflecting market realities.

Actively managed investment strategies should play a key role in any investment portfolio for a variety of reasons:

  • Diversified stock pickers have beaten passive strategies globally Net of fees, truly active diversified stock pickers outperformed the most common benchmarks over meaningful time frames.
  • Passive strategies are not as passive as you think Several facts inherent to many passive strategies keep them from ever being truly indicative of market realities.
  • The coming market may favor active managers A more mature phase in the profit recovery cycle may offer active managers a better opportunity to add value.

In short, a truly actively managed investment strategy can give investors the chance to outperform over a long period of time.

The full commentary is available at OppenheimerFunds.com.


These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the open of business on September 30, 2013, and are subject to change based on subsequent developments.

Carefully consider fund investment objectives, risks, charges and expenses. Visit oppenheimerfunds.com, call your advisor or 1.800.225.5677 (CALL-OPP) for a prospectus with this and other fund information. Read it carefully before investing.

Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc. Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc. OppenheimerFunds Distributor, Inc. is not affiliated with The NASDAQ OMX Group, Inc.
© 2013 OppenheimerFunds Distributor, Inc. All rights reserved.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Investing Ideas , Mutual Funds , Retirement

More from OppenheimerFunds




Follow on:

Research Brokers before you trade

Want to trade FX?

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com