■ At this point in the cycle, investors should consider focusing on risk management and mitigating
downside risk in investment markets, a process inherent in active management.
■ Active managers have historically performed better in difficult markets (Exhibit 1), and top-quartile active
managers have historically added substantial excess return in down markets (Exhibit 2).
■ Even top-quartile active managers routinely underperform. Investors should consider developing a
tolerance for underperformance and using a long-term performance time period to assess skill.
■ Identifying the attributes of a skilled active manager may be critical to driving long-term outcomes.