Goldman Sachs’ Sheila Patel on Active Management

In the previous article, we noted that Sheila Patel, the CEO of Goldman Sachs (GS) Asset Management’s International division, believed that a global meltdown in equities isn’t imminent. As market risks are increasing in the economy, she advised investors to focus on a variety of investment strategies.

Trade war concerns between the world’s two major economies—the US and China—are simmering with mutual threats of import tariffs. This disruption in the global trade environment could subdue the performance of portfolios in a variety of sectors.

Patel stated that clients around the globe are more interested in active management than passive investment strategies. She added that active management could mitigate the increasing risk surrounding global trade disputes. In an active management approach, fund managers focus on mitigating risk and improving investment returns.

However, we’ve seen that a passive investment strategy has been doing well since the US presidential election in November 2016. Among the major indexing funds, the SPDR S&P 500 ETF (SPY), the PowerShares QQQ ETF (QQQ), and the SPDR Dow Jones Industrial Average ETF (DIA) have returned 23.2%, 39.8%, and ~29.6%, respectively, between November 8, 2016, and April 23, 2018.

In the final part of this series, we’ll analyze Goldman Sachs’ views on emerging markets equities.