This podcast is sponsored by:

The CFA Institute. The CFA Institute is the global association of investment professionals whose mission is to lead the investment profession by promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society. CFA Institute serves a global community of investment professionals working to build an investment industry where investors' interests come first, financial markets function at their best, and economies grow. The Chartered Financial Analyst credential is the most respected and recognized investment management designation in the world. The views expressed in this podcast do not necessarily represent the views of the CFA Institute.

Show Notes:

[00:02:04] – (First Question) – What trends in the mutual fund and ETF space have Jeff’s attention today, which Jeff says is the shift towards lower-cost, passive investments

[00:13:48] – Any particular places where we are seeing the most and least flight into passive management from active management and vice versa

[00:25:28] – What catalysts could get people to flow back into active management

[00:38:44] – What are the important things to look for when evaluating active managers

[00:12:31] – Exploring active managers and the amount of money they keep in their own fund typically and how that goes into their evaluation

[00:14:21] – Is there a preference in the type of firms that run funds

[00:15:31] – How does tenure of the manager play into their evaluation

[00:17:24] – Why winning funds can often look like losers

[00:20:45] – Looking at the behavior gap, where the fund is acting in a manner that is more positive than the returns may indicate at the time

[00:23:20] – What will Jeff tell their kids when it comes to investing their money in the future

[00:26:41] – What are the qualitative aspects that Jeff thinks about when evaluating a fund manager

[00:28:53] – How does Jeff weigh holding space and return space as factors when looking at a manage

[00:31:55] – Does Morningstar look at the expense of actively managing a fund over the long term of an investment

[00:32:34] – ActiveShare.info

[00:33:27] – Looking at moats and how managers build them around their business to help them outperform in the future

[00:36:59] – Building a moat around distribution

[00:41:02] – The most interesting manager Jeff has researched – Primecap Management and why their incentive structure works so well

[00:44:26] – What are active fees going to look like in the future?

[00:49:37] – Why more transparency isn’t always better (disclaimer: it is very important to Morningstar)

[00:51:52] – Exploring behavior gaps and how they can be avoided

[00:55:45] – Thoughts on the value-growth paradigm

[00:57:49] – Jeff’s most memorable day throughout his career

[00:59:57] – What was the kindest thing that Jeff has done for others and the kindest thing that was done for him

[01:02:37] – Two bands Jeff would encourage people to check out that are a bit under the radar