Institutional Investors Weigh Active vs. Passive Strategies Amid Evolving Market Dynamics
Institutional asset owners remain divided on the optimal approach to public market exposure, with Cerulli Associates’ latest research revealing a near-even split between active and passive strategy preferences. The February 2024 Cerulli Edge—U.S. Institutional Edition shows 57% of institutions prioritize risk/return profiles over management style, while 30% favor active strategies and 29% prefer passive investments.
Cost sensitivity continues to drive passive adoption, with one-quarter of institutions citing expense as their primary barrier to broader active allocation. "We’re seeing pragmatism prevail," observed a Cerulli analyst, noting that nearly three-fifths of institutions now employ a best-fit approach regardless of classification.