Passive vs. Active Debate
If you found last week's post, Do Active Funds Have A Future?, of interest, you may want to check out this follow-up article from the Pragmatic Capitalism blog: Putting the “Underperformance” of Active Managers in Perspective. (Thanks for sending it, Norman!)
Here's a quick summary:
- We are all active to some degree. No one can perfectly mimic an index fund over the course of their portfolio lifetime so the idea of “active vs passive” is largely an illusion constructed as little more than a marketing scheme.
- Of course 80% of active managers underperform during the market cycle given that most “active” managers are either closet index funds charging high fees with less tax efficiency OR they’re actually hedging their portfolio which means they’re not 100% long only throughout the market cycle.
- A truly strategic and hedging “active” manager will outperform during bear markets because, again, they don’t have 100% long only exposure. This shouldn’t surprise anyone. Likewise, this manager will underperform in bull markets.
- Portfolio frictions are hugely important. We should construct portfolios that are fee efficient, tax efficient and low friction as best we can. The more active a manager is the more portfolio degradation there is likely to be. Unfortunately, the vast majority of active managers don’t justify their fee and implement strategies that are little more than closet index funds.
- None of this means a slightly more active portfolio style doesn’t mesh with your personal financial goals.
Helping Iraqi Christians
Two weeks ago I wrote about the intense persecution of Iraqi and Syrian Christians (as well as other minority groups) by the Islamic State. A steady stream of horror stories continues to flow from the region, although at least there have been a few faint glimmers of hope as news of U.S. air strikes, humanitarian aid, and support to the Kurds (who are defending many of those displaced by IS) has begun.
Still, the situation remains dire:
“I in no way want to suggest that we have effectively contained, or that we are somehow breaking, the momentum of the threat,” said Army Lt. Gen. William C. Mayville Jr., the director of operations for the Joint Chiefs of Staff. In a reflection of the administration’s reluctance to fight another full-fledged war in Iraq, Mayville said there are no plans to expand the limited air campaign, which President Obama ordered last week to prevent the massacre of Iraqi minorities and to protect U.S. military and diplomatic personnel in the northern city of Irbil. U.S. military officials said they have conducted 17 airstrikes — including four on Monday — against fighters from the Islamic State, a jihadist group that has swept across northern Iraq in recent months and controls large parts of Syria. Mayville added, however, that the militants have responded by melting into populated areas, making it harder to target them.
Several of you responded to my request for information about organizations directly supporting these displaced Christians. (Read the comments from that earlier post to learn more.) Thank you!
Since then, I've found two other organizations that I feel good about supporting personally. I found it rather difficult to locate options to support initially, so I share these in the hope that those of you who are inclined to give toward alleviating the suffering of our brothers and sisters can do so easily, and hopefully, effectively.
The first is Campus Crusade's Global Aid Network (GAiN). Their President was recently in Iraq assessing the situation — you can read his reports here. They are on the ground in the refugee camps distributing vital food and other support. And, as always when it's a CRU effort, doing it in Jesus name. Here's the page to donate directly to their Iraq effort.
Update: see this recent post about a matching campaign that can triple your impact while giving alongside other SMI readers and investors!
The second is a group called FRRME — The Foundation for Relief and Reconciliation in the Middle East. This is the ministry of Canon Andrew White, the Vicar of St. George's Church in Baghdad, Iraq. If you start looking into the issue of Christian persecution in Iraq, you're going to come across Canon White before long. Honestly, I can't speak much to the reconciliation side of his ministry, but from a relief standpoint, it appears that they are in the thick of the efforts on the ground to minister practical aid to Iraqi refugees. Canon White's Facebook page is a good source of information about what's happening in these camps. This ministry may not be appealing to everyone: Canon White is an Anglican, one of his main assistants in the relief efforts is a Muslim, and he's taken some criticism for working closely in relief effort with a Mormon. But the contacts and infrastructure he has in place as a result of his long and perilous service right there in Baghdad appear to have given him significant access to be able to meet the current needs on the ground. You can check it out for yourself and make a decision — here is their American giving page.
Whatever organization you choose to work through, I encourage you to pray about doing something. If the shoe were on the other foot, I can only imagine how encouraging it would be in the midst of persecution to know my Christian brothers and sisters around the world were praying for me and trying to help in tangible ways. At the risk of sounding overly dramatic, I don't think it's unreasonable to expect that someday we are going to meet these brothers and sisters face to face and hear about their stories. When that happens, I want to be able to say I prayed for them and sent aid to try to help them in their distress. I doubt they'll care very much which organization that happened through.
Update: Here's a very recent situation report from Samaritan's Purse regarding their current efforts in Iraq.