21 Nov 2016 First Eagle Investment Management: Active Investing for Today’s Markets ( Portfolio )

It is important to keep in mind that passive funds cannot exist without active ones. Investors in passive strategies are willing to commit capital with willful ignorance of the underlying valuation, business risk, capital-structure risk, management risk and regulatory risk of the companies in which they are investing. This strategy of willful ignorance, albeit low in cost, works well only if there is a vibrant active management industry that is pricing the underlying securities relatively efficiently through competitive processes. The passive strategy is, in its essence, a parasitic strategy that requires a vibrant active host.