Rethinking the active-passive divide

Multiple-choice questions. In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please reread the article before attempting the questions again.

According to the CFA Institute, what proportion of global fund net assets come from exchange-traded funds and equity index funds?

Nearly half

10 per cent

More than half

25 per cent

In non-equity asset classes, approximately what is the ratio of active funds to index funds?

4 to 1

5 to 1

3 to 1

2 to 1

Which theory helped to shape the concept of passive management?

Fifty per cent principle

Odd lot theory

Short interest theory

Modern portfolio theory

Which of the following statements is true? Statement 1, an asset's beta is enough to capture the information needed to build an efficient market portfolio, or statement 2, an asset's beta can only capture the correct information during a bear market

Statement 2

Both statements

Neither statement

Statement 1

Which of the following statements is true? Statement 1, passive investments track a market-capitalisation-weighted index, or statement 2, active investments exploit market inefficiencies

Both statements

Statement 1

Neither statement

Statement 2

Which aspects of an asset does fundamental weighting take into account?

Revenue

All of the other answers

Dividends

Operating income

How can a smart beta fund be described?

It is a passive strategy

It is neither active nor passive

It is a hybrid strategy

It is an active strategy

Which of the following statements is true? Statement 1, with smart beta funds, the value factor considers book-to-price ratios, or statement 2, with smart beta funds, the value factor examines returns on equity

Neither statement

Statement 1

Statement 2

Both statements

Which type of indexing allows investors to curate personal portfolios?

Fundamental indexing

Equal-weighted indexing

Direct indexing

None of the other answers

When did passive management first become popularised?

1930s

1950s

1970s

1990s

1 Unit

Rethinking the active-passive divide

According to the CFA Institute, what proportion of global fund net assets come from exchange-traded funds and equity index funds?

In non-equity asset classes, approximately what is the ratio of active funds to index funds?

Which theory helped to shape the concept of passive management?

Which of the following statements is true? Statement 1, an asset's beta is enough to capture the information needed to build an efficient market portfolio, or statement 2, an asset's beta can only capture the correct information during a bear market

Which of the following statements is true? Statement 1, passive investments track a market-capitalisation-weighted index, or statement 2, active investments exploit market inefficiencies

Which aspects of an asset does fundamental weighting take into account?

How can a smart beta fund be described?

Which of the following statements is true? Statement 1, with smart beta funds, the value factor considers book-to-price ratios, or statement 2, with smart beta funds, the value factor examines returns on equity

Which type of indexing allows investors to curate personal portfolios?

When did passive management first become popularised?

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