Is active or passive investing better? It’s a question investors have debated for decades. But in our experience, the most effective wealth management solutions are rarely one or the other. To explore why balance beats bias, we spoke with Dr. Alex Hinder, senior expert in active index investing at Alpinum Investment Management, our longstanding partner.

 

Active and passive: Two sides of the same coin?

Few topics in investing have stirred as much discussion – and as many strong opinions – as the question of active vs. passive investment management. The extraordinary rise of passive investing in recent decades has only sharpened the debate.

Many investors want to know whether one is better than the other. Should they follow an active strategy that may be complex and costly or a passive approach that offers simplicity and lower costs?

The choice often appears to be either-or. But the reality is far more nuanced.

At Marcuard Heritage, we believe both approaches play an essential role when applied thoughtfully and always in line with a client’s objectives. It’s not about choosing sides. It’s about selecting the right tools for the right context and adapting to market realities to serve the client’s long-term goals.

Few people understand this balance better than Dr. Alex Hinder.

 

Meet Dr. Alex Hinder: Economist, entrepreneur, ETF specialist

When it comes to experience, Dr. Alex Hinder brings the full spectrum. Over the past 30 years, he’s held a variety of roles and leadership positions at some of Switzerland’s most respected financial institutions, including serving as Chief Investment Officer at the former Bank Leu. With a PhD in economics (Dr. oec.) from the University of St. Gallen, one of Europe’s leading business institutions, Dr. Hinder has also served as an analyst, portfolio manager, and chief economist.

While working in these different roles across the investment sector, Dr. Hinder realized how difficult it is to consistently and systematically outperform the market over the long term just by picking stocks. He determined that the best strategy was one focused on asset allocation – a mix of major asset classes such as equities, bonds, and cash.

“Asset allocation accounts for the largest portion of long-term portfolio returns, with studies indicating it can determine between 70% and 90% of the outcome,” he says.

Dr. Hinder’s experience also showed him that cost-efficient solutions were needed to implement this approach and adjust the asset allocation effectively.

“While institutional clients began adopting this approach thirty years ago, it was still virtually unknown among private clients in Switzerland,” he says. “I was convinced that it was only a matter of time before private clients, too, would come to appreciate the advantages of this investment strategy.”

As the European market for Exchange-Traded Funds (ETFs) grew in the early 2000s, Dr. Hinder put his theory to the test. He founded Hinder Asset Management, an independent company based in Zurich in order to offer this strategy to private individuals.

“The ever-expanding range of ETFs made it possible to implement an active investment strategy using passive building blocks,” he says.

After founding Hinder Asset Management and establishing himself as an expert on asset allocation and index investing, Dr. Hinder also took on various consulting mandates for large institutional investment funds. For example, he served for nine years as Chairman of the Investment Committee and Member of the Board of Trustees of PUBLICA, the Swiss Federal Pension Fund, which is the largest in Switzerland with assets of over CHF 42 billion.

Today, Dr. Hinder is a senior portfolio manager at Alpinum Investment Management, focusing exclusively on ETF and index-based investment strategies.

“After stepping back from the day-to-day operations of Hinder Asset Management and relinquishing all consulting mandates, I was looking for a suitable opportunity to continue my fund management activities. Alpinum was the perfect fit. I was immediately convinced by the highly professional atmosphere, excellent regulatory set-up, flawless administration, and friendly team at Alpinum Investment Management.”

Thanks to our close relationship with Alpinum, Marcuard Heritage enjoys direct access to Dr. Hinder’s strong academic foundation and extensive market knowledge. He plays a key role in guiding how passive instruments are used effectively across our client portfolios.

What sets Dr. Hinder apart isn’t just his long track record. It’s his pragmatic mindset – one that puts value ahead of dogma. “We don’t invest in ideologies. We invest in outcomes,” he says. Read on to learn more.

 

“We don’t invest in ideologies. We invest in outcomes.”

 

Passive with purpose: When simplicity outperforms complexity

Dr. Hinder says passive instruments are all about outcomes. At a time when structured products and bespoke investment strategies often compete for attention, ETFs allow him to build long-term, transparent portfolios and manage them effectively. These qualities make them especially effective in broad, well-functioning markets – where the odds of beating the benchmark through other means are low.

“ETFs are, in my view, the best investment instruments. They are very liquid, transparent, and cost-efficient. They also allow for rapid implementation of investment ideas.”

ETFs are now widely accepted, but that wasn’t always the case. That’s because investing through index funds requires a different mindset. Passive portfolios do not include single stocks such as shares in Apple or SAP. Instead, they comprise shares of “stock indexes” – funds that replicate or mirror an index like the S&P 500. This was hard for many investors to understand.

“Most investors were only familiar with individual stocks or bonds,” he explains. “Actively managed investment funds have existed for a long time, but they had a negative image. ETFs as passive funds appeared complicated to the average investor, not least due to the fact that ETFs frequently have relatively obscure names. Take, for example, a fund like ‘Xtrackers MSCI Europe Small Cap UCITS ETF’. That sounds very exotic to a layperson. Today, many investors are still not very familiar with the term ‘stock index’ and what exactly it entails.”

What made investors start to take notice of index funds and ETFs?

“The first index funds and ETFs were launched in the United States,” says Dr. Hinder. “The growth and acceptance of ETFs have always been much greater in the US than in Europe. Ultimately, it was the significant publicity and success in the US that increased acceptance here. More and more European investors gradually discovered the advantages of ETFs – the primary being the low cost.”

But as the popularity of ETFs grew, so too did the number of “do-it-yourself” investors. Dr. Hinder warns that individuals shouldn’t be misled by the transparency and simplicity of passive investing.

“It’s a common misconception that anyone can manage a portfolio with ETFs – that it doesn’t require a wealth manager,” he says. “But assembling an ETF portfolio requires a deep understanding of the key characteristics of each index investment, like tax status, replication method, liquidity, and more.”

Dr. Hinder’s expertise is grounded in both experience and results. During his 14 years leading Hinder Asset Management, he built a successful strategy around active index investing – the dynamic management of passive products like ETFs.

“Selecting the right instrument is not trivial,” he says. “Since ETFs are traded like stocks, each transaction should be carefully planned. Following that, monitoring and adapting the portfolio to current market developments is necessary. With over 3,100 ETFs listed on the Swiss stock exchange alone, selecting the right ones takes experience, research, and access to specialized tools – far more than most investors realize.”

Today, at Alpinum Investment Management, Dr. Hinder continues to refine that approach, working closely with Marcuard Heritage’s relationship managers to ensure passive tools are deployed where they are most effective.

“Passive investing means knowing when simplicity outperforms complexity,” says Dr. Hinder. “When a more transparent and cost-effective approach will meet the client’s needs.”

 

“Passive investing means knowing when simplicity outperforms complexity.”

 

Active index investing: When passive isn’t so passive

Passive doesn’t mean static. The simplicity of index-based investing doesn’t translate to a hands-off approach. On the contrary, Dr. Hinder says that active decision-making is what matters most. Markets shift, client needs evolve, and strategies must adapt accordingly.

“Many people believe passive investing means doing nothing – but nothing could be further from the truth!” he emphasizes. “A portfolio with passive components must be continuously monitored so that you can react to market developments.”

What passive instruments offer is more clarity and control – two qualities that support active management.

“ETFs are generally very well diversified, with one ETF typically covering a broad asset class or a specific segment,” says Dr. Hinder. “The risks associated with a portfolio of ETFs are much easier to manage compared to a portfolio comprised of individual securities.”

The key lies in how the tools are used. Dr. Hinder utilizes ETFs as the foundation of a disciplined, selective investment process – one that relies on continuous assessment of global market conditions and thoughtful portfolio construction.

“I like to use the term ‘building block’ in this context,” he says. “As an investor, I can focus fully on the investment strategy and the asset allocation rather than individual securities. Providing tailored portfolios becomes much simpler as a result.”

Another advantage of ETFs is the cost efficiency, which enables the flexibility needed for active index investing.

“The flexibility of passive portfolios is indeed very high. This is particularly evident when rebalancing a portfolio after significant market movements. Without altering the portfolio’s risk-return characteristics, overweight or underweight positions can be adjusted very quickly. This is much more difficult with individual securities, requiring significantly more effort.”

That flexibility does come with a downside, however.

“It can also be dangerous,” warns Dr. Hinder. “It can tempt investors to act hastily and make rash decisions in their portfolios.”

So, how does active index investing work?

“Active management of index investments focuses on asset allocation, both strategic and tactical. Strategic asset allocation includes the concept of benchmark setting. Tactical asset allocation allows for numerous adjustments: adjusting equity, bond, precious metal, and cash allocations; managing country and sector weights; selecting investment themes like “Hydrogen,” “Robotics,” or “AI”; managing duration for bonds, and finally managing FX (hedging). Many currency-hedged products are available in the ETF space.”

In a nutshell, Dr. Hinder stresses that using passive tools doesn’t eliminate the portfolio manager’s role – it sharpens it.

 

“It’s a common misconception that anyone can manage a portfolio with ETFs.”

 

The best of both worlds: A strategy built on balance, not bias

Although Dr. Hinder focuses exclusively on the active management of passive portfolios, he’s the first to emphasize that passive investments are simply one strategic piece of the puzzle – one important part of a holistic approach to wealth management.

“Efficiency where it makes sense – active conviction where it counts,” he says.

We couldn’t agree more. At Marcuard Heritage, we don’t believe in one-size-fits-all solutions – or in choosing sides when it comes to investment style. Our philosophy is rooted in thoughtful diversification, purposeful implementation, and an unwavering focus on our clients’ long-term objectives.

That’s why we draw on active and passive investment strategies and work closely with experienced specialists at Alpinum Investment Management like Dr. Alex Hinder.

“It’s not about active or passive,” he says. “It’s about understanding the tools at your disposal – and using them well.”

We rely on ETFs and index instruments for broad market exposure, risk diversification, and cost efficiency. At the same time, we continue to draw on the strengths of actively managed funds, especially in areas where active selection, market insight, or tactical positioning can deliver added value – such as niche markets, thematic strategies, or complex asset classes.

As an independent wealth manager, we can blend these tools without bias, always in alignment with each client’s specific needs and objectives. Our partnership with Alpinum Investment Management plays a key role in this model. Through Alpinum, we access deep expertise in systematic strategies, manager selection, and multi-asset solutions – including the index-based approach championed by Dr. Hinder.

 

“Efficiency where it makes sense – active conviction where it counts.”

 

It’s not either/or, it’s all of the above

In a world of competing strategies and fast-changing markets, the best results are rarely found at the extremes. At Marcuard Heritage, we don’t choose sides – we determine what works and apply it with intention.

It’s the same philosophy we apply when choosing partners – selecting those who share our commitment to performance over ideology. Our partnership with Alpinum ensures we never have to settle for one strategy or the other. We can pick and choose from all of the above based on what’s best for our clients.

 

 

Are you looking for a partner who prioritizes performance over ideology? Let’s talk about what’s possible when you blend the best of both worlds. Contact us today!

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