Passive beta exposure vs active alpha exposure

CFA Level III Equities
#1

Passive beta exposure vs active alpha exposure. Which is cheaper?.

#2

By cheaper do you meaning cheaper to implement?

Passive Beta exposure, i.e, being long the S&P500 would be cheaper than active alpha exposure.

#3

Whatever beta or alpha, passive investment is cheaper than active in general, except if you go for something crazy of course, like full replication of an illiquid index or who knows what else. But generally speaking, this is the rule.

#4

Thank you guys. Yes, that makes sense.

#5

By the way, I said “whatever beta or alpha”, but actually there is no alpha with passive investment so… :op

#6

Thanks myriam2222,