“The fact that there can be increased volatility and there can be increased risk, that is what you’re chasing when you’re looking for above-average returns outside of these passive, broad-based indexes,” he said.
“Just because the majority of products out there in the marketplace are deemed passive, it doesn’t mean that they’re not being used in an active way around a core position,” he said.
Only roughly $300 billion in assets follows active strategies, Shepard said.
“Ten, 20 years ago, investors and advisors alike didn’t have the ability to get creative,” he said. “Now you’re looking at nearly 2,800 U.S.-listed ETFs. They now have the tools to tilt a portfolio one way or another based on their risks, their objectives, and that hasn’t been there historically.”
