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Making the implicit explicit: A framework for the active-passive decision

June 15, 2017

How should an investor allocate across active and passive investments? Without a structured process, it's an arbitrary decision based on implicit assumptions. To make clear the explicit attributes behind the decision, Vanguard has developed a quantitative framework for active-passive decision-making.

Active passive investing framework infographic

1 Flowchart is based on our research paper. There may be other material differences between active and passive that must be considered prior to investing.
Source: Vanguard.

Note:

  • All investing is subject to risk, including the possible loss of the money you invest. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

© 2017 The Vanguard Group, Inc. All rights reserved.

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