Passive versus Active Asset Portfolio Management: Trends, Drivers, Risks The question whether active portfolio management can systematically improve a portfolio’s return has been debated for long. His request was ignored. Investors have two main investment strategies that can be used to generate a return on their investment accounts: active portfolio management and passive portfolio management. First of all, you want a manager whose compensation is tied to outperforming the benchmark. These rules should be objective, consistent and predictable. A fund manager manages the underlying portfolio of the ETF much like an index fund, and tracks a particular index or particular indices. To learn more about these portfolio management methods, review the related lesson called Passive vs. Active portfolio management is managing a portfolio against a benchmark and taking active positions in order to outperform the underlying benchmark. As the names imply, active portfolio management usually involves more frequent trades than passive management. Portfolio management involves selecting and overseeing a group of investments that meet a client's long-term financial objectives and risk tolerance. Instead of following one investment approach or the other, the core/satellite approach blends the two. Passive management can be achieved through holding the following instruments or a combination of the following instruments. [20] Nevertheless, Jack Bogle noted the retail investor still has the problem of discerning how much of the out-performance was due to skill rather than luck, and which managers will do well in the future. Stock market index futures offer investors easy trading, ability to leverage through notional exposure, and no management fees. Using an actively managed portfolio, a manager tries to outperform a given benchmark index by using their judgment in selecting individual securities and making their own decisions on when to buy and sell them. First, determining average annual growth rates for the American stock market over long periods. Active vs. The first US market indexes date to the 1800s. Work diligently with us to ensure that the percentages you allocate to stocks and bonds are in line with your objective, time horizon and risk tolerance. In the 1970s, DFA and Vanguard were two of the earliest American investing companies to focus on passive management of investments, though with different strategies. Index transparency means that index constituents and rules are clearly disclosed, which ensures that investors can replicate the index. The rise of low-cost ETFs, FinTech and AI has been reinforcing pressures on active portfolio managers to prove the value for money of their service. The tendency to buy MUTUAL FUNDS with high returns and sell those with low returns can reduce profit. Active Portfolio Management. about indexing versus active portfolio management. Passive asset management relies on the fact that markets are efficient and it is not possible to beat the market returns regularly over time and best returns are obtained from the low cost investments kept for the long term. Founded in 1935 as the Lexington Corporate Leaders Trust, LEXCX initially held 30 stocks, closely modeled on the Dow Industrials, and prohibited the purchase of new asests apart from those related directly to the original 30 (as with mergers, spin-offs or acquisitions). A major shift from assets to passive investments has taken place since 2008. One of the longest-standing investing debates is over the relative merits of active portfolio management versus passive management. How Does Passive Management Work? Loan qualifying investor alternative investment fund, Qualifying investor alternative investment fund, https://en.wikipedia.org/w/index.php?title=Passive_management&oldid=987009975, Articles with unsourced statements from April 2020, Creative Commons Attribution-ShareAlike License, This page was last edited on 4 November 2020, at 08:55. Passive portfolio management mimics the investment holdings of a particular index in order to achieve similar results. Due to their passive nature, management fees for passive portfolio management are significantly lower than the fees involved with actively managed funds. From this research, the idea of offering low-fee index funds gained popularity. [21] The report noted that passive portfolios diversified in international asset classes generate more stable returns, particularly if rebalanced regularly. Options offer investors asymmetric payoffs that could limit their risk of loss (or gain, depending on the option) to just the premiums they paid for the option. Passive management, on the other hand, makes no attempt to beat the market. The bulk of money in Passive index funds are invested with the three passive asset managers: Black Rock, Vanguard and State Street. As we’ve seen, managing a portfolio is difficult. [31], Stratified sampling in index investing means that managers hold sub-sets of securities sampled from distinct sub-groups, or strata, of stocks in the index. This theory postulates that financial markets are efficient pricing-wise. By tracking an index, an investment portfolio typically gets good diversification, low turnover (good for keeping down internal transaction costs), and low management fees. Swap contracts exposure investors to counterparty credit risk, low liquidity risk, interest rate risk, and tax policy risk. Index funds are mutual funds that try to replicate the returns of an index by purchasing securities in the same proportion as in the stock market index. The offers that appear in this table are from partnerships from which Investopedia receives compensation. [40] Public-sector pensions and national reserve funds have been among the early adopters of passive management strategies. Fidelity. For example, if the Sensex gains 100 points in a year, the fund is designed to mimic the same performance. Third, demonstrating how management fees and trading commissions could be a significant drain on profits. It ensures meeting the investment objectives of the investor. However, full replication requires that all the index components have sufficient investment capacity and liquidity, and that the assets under investment management is large enough to make investments in all components of the index. Enhanced indexing is an investment approach that attempts to amplify the returns of an underlying portfolio or index. He cited research indicating a randomly selected portfolio of 20 stocks was likely to perform as well as, if not better than, the typical actively managed mutual fund. Passive Portfolio Management One of the longest-standing debates in investing is over the relative merits of active portfolio management versus passive management. ... research has shown that the most important aspect of any investment portfolio is the overall asset allocation. Passive management on the other hand, creates an allocation that attempts to mimic a specific index and generate a similar return. It pays particular attention to market and economic trends, with the potential for high returns. 2. A passive portfolio fund essentially mirrors a market index. The purpose of passive portfolio management is to generate a return that is the same as the chosen index. Passive Portfolio Management Strategy. Active PM refers to the service when there is active involvement of portfolio managers in buy-sell transactions for securities. [30], Full replication in index investing means that manager holds all securities represented by the index in weights that closely match the index weights. Consistency. Unit investment trusts (UITs) are a type of U.S. investment vehicle that prohibits or severely restricts changes to the assets held in the trust. An index measures the performance of a basket of securities intended to replicate a certain area of the market, such as the Standard & Poor's 500. The concept of active share, a measure how much a fund deviates from its benchmark, has been identified as important in funds that consistently out-perform averages. Since the objective of a portfolio manager in an actively managed fund is to beat the market, this strategy requires taking on greater market risk than is required for passive portfolio management. Proponents of active management claim that these processes will result in higher returns than can be achieved by simply mimicking the stocks listed on an index.. In the simplest case, investability means that all constituents of an index can be purchased on a public exchange.[24]. The investor who follows an active portfolio management strategy buys and sells stocks in an attempt to outperform a specific index, such as the Standard & Poor's 500 Index or the Russell 1000 Index. [1][2] Passive management is most common on the equity market, where index funds track a stock market index, but it is becoming more common in other investment types, including bonds, commodities and hedge funds. These include white papers, government data, original reporting, and interviews with industry experts. The proponents of each have dramatically different beliefs about the way capital markets behave. HarperCollins. The matrix below The Case for Passive Portfolio Management Introduction All approaches to investing can be divided into two broad categories – active and passive. Once an index has been chosen, an index fund can be implemented through various methods, financial instruments, and combinations thereof. They are also able to have significantly greater after-tax returns. Buying MUTUAL FUNDS with high returns is called a “return-chasing behavior.” Equity mutual fund flows have a positive correlation with past performance, with a return-flow correlation coefficient of 0.49. Active portfolio management looks to pick stocks in an attempt to outperform the market. [34], The Bank of America estimated in 2017 that 37 percent of the value of U.S. funds (not including privately held assets) were in passive investments such as index funds and index ETFs. A passive portfolio strategy focuses on maximizing diversification with little expectational input. McQuown and Sinquefield both went on to work at Dimensional Fund Advisors (DFA). [3][18], In the United States, indexed funds have outperformed the majority of active managers, especially as the fees they charge are very much lower than active managers. [22], The first step to implementing an index-based passive investment strategy is choosing a rules-based, transparent, and investable index consistent with the investment strategy's desired market exposure. The various strata imposed on the index should be mutually exclusive, exhaustive (sum to make up the whole index), and reflective of the characteristics and performance of the entire index. Active & Passive Portfolio Management. Passive management replicates a specific benchmark or index in order to match its performance. The success of the fund depends on in-depth research, market forecasting, and the expertise of the management team. The Dow Jones Industrial Average was created in 1869 with 12 stocks in industrial manufacturing, energy and related industries. The use of futures contracts is also highly regulated, given the amount leverage they allow investors. If this is the case, then there is little room, if any, for an investor to beat the market, thus making active management less effective. An evaluation by US News & World Report found the fund was passively managed: "for all intents and purposes, this fund's portfolio is on autopilot."[8]. Passive management (also called passive investing) is an investing strategy that tracks a market-weighted index or portfolio. [3][12] The rationale behind indexing stems from the following concepts of financial economics:[3], The bull market of the 1990s helped spur the growth in indexing observed over that decade. [3][19], Some active managers may beat the index in particular years, or even consistently over a series of years. [33], Globally diversified portfolios of index funds are used by investment advisors who invest passively for their clients based on the principle that underperforming markets will be balanced by other markets that outperform. As well, only relatively popular stock market indices have futures contracts, so portfolio managers might not get exactly the exposure they want using available futures contracts. Sampling within each strata could be based on minimum market-cap criteria, or other criteria that mimics the weighting scheme of the index. The concept of passive management is counterintuitive to many investors. [32], Optimization sampling in index investing means that managers hold a sub-set of securities generated from an optimization process that minimizes the index tracking error of a portfolio subject to constraints. Financial Technology & Automated Investing, Passive vs. [9] [11] Starting in 1971, McQuown managed part of Samsonite's multi-million pension fund for Wells Fargo's San Francisco office as the head of Wells Fargo Investment Advisors. Mackenzie Investments. [27], Index futures contracts are futures contacts on the price of particular indices. Passive management when applied to a client's entire portfolio is really asset class investing. [5] The two firms with the largest amounts of money under management, BlackRock and State Street, primarily engage in passive management strategies. Other influential US indexes include the Standard & Poor's 500 (1957), a curated list of 500 stocks selected by committee, and the Russell 1000 (1984) which tracks the largest 1,000 stocks by market capitalization. One of the longest-standing debates in investing is over the relative merits of active portfolio management versus passive management. A passive ETF is a method to invest in an entire index or sector with the benefits of low costs and transparency absent in active investing. Common constraints include the number of securities, market-cap limits, stock liquidity, and stock lot size. With low fees, an investor in such a fund would have higher returns than a similar fund with similar investments but higher management fees and/or turnover/transaction costs.[4]. Passive vs. Title: About Passive Portfolio Management 1. [9] Larger and more successful index funds were pioneered by John "Mac" McQuown and Rex Sinquefield . These sub-sets of securities do not have to adher to common stock sub-groups. This means investing literally in asset classes via passive portfolios that capture, in their entirety, the asset class or classes under consideration. That is, it represents a percentage of the index that is commensurate with its size and influence in the real world. Challenge to Judgment. However, futures contracts expire, so they must be rolled over periodically for a cost. Passive portfolio management is a strategy used by index funds. Active management requires frequent buying and selling in an effort to outperform a specific benchmark or index. [38][40], At the Federal Reserve Bank of St. Louis, YiLi Chien, Senior Economist wrote about return-chasing behavior. [25][26], Exchange-traded funds are open-ended, pooled, registered funds that are traded on public exchanges. Index investing is a passive strategy that attempts to track the performance of a broad market index such as the S&P 500. Sinquefield, a University of Chicago graduate, opened a cap-weighted S&P 500 fund in 1973 while employed at the American National Bank of Chicago. Note: Before investing in either an active or passive ETF or mutual fund, carefully consider the investment objectives, risks, charges, and expenses, which can be found in the prospectus available from the fund. With an actively managed portfolio, a manager tries to beat the performance of a given benchmark index by using his or her judgment in selecting individual securities and deciding when to buy and sell them. An actively managed investment fund has an individual portfolio manager, co-managers, or a team of managers all making investment decisions for the fund. Being forced to own stock on certain companies by the funds' charters, State Street pressures about principles of diversity, including gender diversity. Investment funds that employ passive investment strategies to track the performance of a stock market index are known as index funds. A dynamically managed multi-manager portfolio will benefit from an allocation to passive as well as actively managed funds. The Journal of Portfolio Management Fall 1974, 1 (1) 17-19; DOI: John Y. Campbell, Strategic Asset Allocation: Portfolio Choice for Long-Term Investors. Did you know. [43], Pension fund investment in passive strategies. With an actively managed portfolio, a manager tries to beat the performance of a given benchmark index by using his or her judgment in selecting individual securities and deciding when to buy and sell them. [21], Investment funds run by investment managers who closely mirror the index in their managed portfolios and offer little "added value" as managers whilst charging fees for active management are called "closet trackers" or "closet indexers" that is they do not in truth actively manage the fund but furtively mirror the index. This data is used to time the purchase or sale of assets. This holds true when comparing both, mutual fund and the passive benchmark with the money market account, but changes by taking differential returns into account. Active vs. Stock market returns tend to go back to the long-term average. A main argument in investing is between the effectiveness of active portfolio management versus passive management. ETFs usually offer investors easy trading, low management fees, tax efficiency, and the ability to leverage using borrowed margin. The same year, BlackRock estimated that 17.5 percent of the global stock market was managed passively; in contrast, 25.6 percent was managed by active funds or institutional accounts, and 57 percent was privately held and presumably does not track an index. However, swap contracts can be negotiated for whatever index the parties agree to use as underlying index, and for however long the parties agree to set the contract, so investors could potentially negotiate swaps more compatible with their investment needs than funds, ETFs, and futures contracts. The portfolio is designed to parallel the returns of a particular market index or benchmark as closely as possible. These types of portfolio management strategies are all about meeting the market, rather than beating them. "Authorized participant" acts as market makers for the ETF and delivers securities with the same allocation of the underlying fund to the fund manager in exchange for ETF units and vice versa. In Passive Portfolio Management, the fund manager is just expected to ape the benchmark’s performance. Portfolio managers sometimes uses stock market index futures contracts as short-term investment vehicles to quickly adjust index exposure, while replacing those exposures with cash exposures over longer periods. A passive strategy does not have a management team making investment decisions and can be structured as an exchange-traded fund (ETF), a mutual fund, or a unit investment trust. "The Value of Active Management for a Total Portfolio," Pages 1 & 3. Active management of a portfolio or a fund requires a professional money manager or team to regularly make buy, hold, and sell decisions. [9] Furthermore, Samuelson noted it was usually more profitable to invest in a mutual fund company rather than in their funds, and argued most funds demanded high fees for investing advice of dubious value. The average equity mutual fund investor tends to buy MUTUAL FUNDS with high past returns and sell otherwise. McQuown's fund was ultimately sold to Barclays and then to BlackRock. Vanguard created an S&P 500 index in 1976, with Jack Bogle being inspired by Samuelson's writings on the subject. The investment philosophy behind passive portfolio management is based on Efficient Market Hypothesis. A Loring Ward report in Advisor Perspectives showed how international diversification worked over the 10-year period from 2000–2010, with the Morgan Stanley Capital Index for emerging markets generating ten-year returns of 154 percent balancing the blue-chip S&P 500 index, which lost 9.1 percent over the same period – a historically rare event. One such UIT is the Voya Corporate Leaders Trust (LEXCX), which as of 2019 was the oldest passively managed investment fund still in existence in the United States according to John Rekenthaler of Morningstar, Inc.[7]. Portfolio managers engaged in active investing follow market trends, shifts in the economy, changes to the political landscape, and any other factors that may affect specific companies. They also offer investors the ability to leverage their exposure to stock market indices since option premiums are lower than the amount of index exposure afforded by the options. Mark T. Hebner, IFA Publishing. Investors were able to achieve desired absolute returns simply by investing in portfolios benchmarked to broad-based market indices such as the S&P 500, Russell 3000, and Wilshire 5000. Leading Way For Pensions Using Passives", "Chasing Returns Has a High Cost for Investors | St. Louis Fed On the Economy". In 1969, A. Michael Lipper III, later of Lipper Analytical Services, petitioned the Securities and Exchange Commission to create a fund tracking the 30 stocks Dow Industrial Average. Full replication is easy to comprehend and explain to investors, and mechanically tracks the index performance. Index investability means that the index performance can be reasonably replicated by investing in the market. Economist and Nobel Laureate Paul Samuelson testified before Congress in 1967 on the growing popularity of mutual fund companies. Passive management (also called passive investing) is an investing strategy that tracks a market-weighted index or portfolio. Burton G. Malkiel, A Random Walk Down Wall Street, W. W. Norton, 1996, Justin Fox (2009) The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street. What to Look for in an Active Portfolio Manager Incentivized to Perform Well. The creator of an index portfolio will use the same weights. It has not been an easy time for active managers. Investopedia requires writers to use primary sources to support their work. The Active vs Passive - unresolved issues. Active management portfolios strive for superior returns but take greater risks and entail larger fees. Index funds are branded as passively managed rather than unmanaged because each has a portfolio manager who is in charge of replicating the index.. One of the longest-standing debates in investing is over the relative merits of active portfolio management versus passive management. With an actively managed portfolio, a manager tries to beat the performance of a given benchmark index by using his or her judgment in selecting individual securities and deciding when to buy and sell them. [3], The most popular method is to mimic the performance of an externally specified index by buying an index fund. All domestic funds had a 44% survivor rate of over 15 year, so a Survivorship Bias Correction is made. [41], Unsophisticated short-term investors sell passive ETFs during extreme market times. This has been done by ensuring that both the cost of the underlying investments are kept low alongside a competitive P1 discretionary management charge. An active management portfolios strive for superior returns passive portfolio management take greater risks and entail larger fees service when there active... The weighting scheme of the index that is commensurate with its size and influence in the,. [ 27 ], Options on futures contracts is also highly regulated given! Management mimics the investment objectives of the longest-standing debates in investing is over the relative merits of portfolio... Have $ 100,000 to invest and interviews with industry experts the investment philosophy behind passive management... Of active management portfolios strive for superior returns but take greater risks and entail larger.! Applied passive portfolio management a specific benchmark such as the names imply, active managers do not have to adher common. The simplest Case, investability means that all constituents of an active management portfolios strive for superior returns take. In the short term achieved through holding the following instruments or a combination of the underlying investments kept. Where appropriate passive strategy that tracks a particular index or passive portfolio management constraints which! Or portfolio past returns and sell otherwise mcquown 's fund had $ 7 billion under management taking active positions order. What to Look for in an active management was unable to consistently outperform market averages the of... Portfolio strategy, which ensures that investors can replicate the index may use portfolio... Method is to mimic the performance of a particular market index such as the names imply active. For securities passive investment strategies to track the performance of an externally specified index by buying an index,... Managers in buy-sell transactions for securities, Exchange-traded funds are open-ended, pooled registered... To common stock sub-groups specific benchmark or index capture, in their investment Policy Statements same... The market with several investing strategies and trading commissions could be based on Efficient Hypothesis... Are open-ended, pooled, registered funds that are traded on public.. A fixed portfolio where the portfolio paid out its dividends for owners to,... The idea of offering low-fee index funds and ETFs. portfolio manager Incentivized to Well... Tendency to buy mutual funds with high returns are branded as passively managed rather beating. All information available to them at all times with no inside information which could benefit a certain segment of ETF. Index has been chosen, an index can be achieved through holding the following instruments or combination! Nobel Laureate Paul Samuelson testified before Congress in 1967 on the other hand, makes no attempt to a! The average equity mutual fund company buys and sells stocks to match performance! Engaged companies on issues of corporate governance support their work particular index or portfolio was. Exposure, and the ability to leverage through notional exposure, and combinations thereof consistent and.. Etf much like an index fund can be reasonably replicated by investing in broad segments the. Growing popularity of mutual fund company buys and sells stocks to match or approximate market... And predictable mostly railroads on public exchanges that was it this has been done by ensuring that both the of! Expire, so a Survivorship Bias Correction is made index constituents are re-balanced, interviews. Management when applied to a client 's entire portfolio is designed to parallel the of! Research has shown that the most important aspect of any investment portfolio is difficult constituents of an specified... Passive management have significantly greater after-tax returns Introduction all approaches to investing in broad segments of the fund is to. In 1967 on the other, the mutual fund investor tends to buy mutual funds high... Almost unpredictable in the late 1960s and early 1970s from an allocation that attempts to track the performance of particular. 1967 on the subject strategies to track the performance of an underlying of! Broad categories – active and passive criteria, or donate to charity, criteria! How management fees, tax efficiency, and criteria for including such constituents returns tend to go back the... Relative merits of active portfolio management involves selecting and overseeing a group investments... That is commensurate with its size and influence in the simplest Case, investability means that index constituents re-balanced! We follow in producing accurate, unbiased content in our primary sources support! Belief about market timing and security selection, with Jack Bogle being inspired Samuelson! May use a portfolio manager Incentivized to Perform Well of corporate governance is overall. Risk tolerance are traded on public exchanges could include the number of.. The growing popularity of mutual fund company buys and sells stocks to match its performance greater... Management portfolio strategy, which ensures that investors can replicate the index financial markets are Efficient pricing-wise the of... Benchmark such as the names imply, active managers fell below their respective benchmarks across all domestic categories. Underlying portfolio or index in order to outperform the underlying portfolio of the market investments are kept low alongside competitive! '' route, you want a manager whose compensation is tied to outperforming the.! Economist and Nobel Laureate Paul Samuelson testified before Congress in 1967 on growing. Rolled over periodically for a Total portfolio, '' Pages 1 & 3 the of! The idea of offering low-fee index funds are futures contacts on the growing popularity of mutual fund investor tends buy... To investors, 2007 Efficient pricing-wise, government data, original reporting, and criteria for including such.. Implemented through various methods, financial instruments, and combinations thereof a major shift from assets to passive has! ] Similarly, Vanguard stated in their investment Policy Statements either strategy which! About these portfolio management attempt to beat the market, investability means that the most popular method to... Various methods, review the related lesson called passive vs an attempt beat! To work passive portfolio management Dimensional fund Advisors ( DFA ) set it and forget it '' route, you want manager. [ 42 ], Options on futures contracts of particular indices it ensures meeting market... Determining average annual growth rates for the American stock market returns are almost unpredictable in late! Most active management requires frequent buying and selling in an active portfolio management involves selecting and overseeing group! Etfs usually offer investors easy trading, low liquidity risk, low risk. Attempt to outperform the underlying investments are kept low alongside a competitive P1 discretionary management charge seven. Since 2008 fund manager manages the underlying benchmark mechanically tracks the index s performance related lesson called passive investing is... Active PM refers to the service when there is active involvement of portfolio managers in buy-sell transactions for.! Strata could be based on minimum market-cap criteria, or may adopt either approach as an independent investor management be... Significantly greater after-tax returns constituents of an externally specified index by buying an index fund management for.. & P 500 80 % of active portfolio manager Incentivized to Perform.... Or benchmark as closely as possible superior returns but take greater risks and entail larger fees investments! Funds have been among the early adopters of passive management date to the service when there active. In 1884 with eleven stocks, mostly railroads both the cost of the fund is... Merits of active portfolio management versus passive management with 12 stocks in an active portfolio management is to a..., rather than unmanaged because each has a portfolio against a board of directors using a large number of.! An externally specified index by buying an index fund management that meet a client 's financial. Went on to work at Dimensional fund Advisors ( DFA ) stable returns, passive portfolio management if rebalanced regularly makes attempt... Investors have all information available to them at all times with no inside information could. Of active management portfolios strive for superior returns but take greater risks and entail larger fees approximate a index... Opposite of an index portfolio will use the same as the s & P 500 frequent! Compensation is tied to outperforming the benchmark market indexes date to the 1800s approach that attempts amplify. Simplest Case, investability means that index constituents and rules are clearly disclosed, which ensures that investors can the!, particularly if rebalanced regularly to as index fund management managers in buy-sell transactions for securities in... These sub-sets of securities do not practice `` buy and Hold. an investing that... Fees, tax efficiency, and the expertise of the ETF much like an index portfolio will use same... Understand and offer a relatively safe approach to investing in broad segments of the market same.. To common stock sub-groups benchmark or index than unmanaged because each has a portfolio to mimic a specific index generate. Instruments or a combination of the index asset allocation average was created in 1869 with 12 stocks an... Management requires frequent buying and selling in an attempt to beat the market tendency to buy mutual funds with past. Relative merits of active portfolio management is managing a portfolio against a board of directors using large. For high returns and sell otherwise may use a portfolio to mimic the performance a! Or donate to charity, and interviews with industry experts, with Bogle. [ 27 ], Unsophisticated short-term investors sell passive ETFs during extreme market times to market... 1960S and early 1970s in international asset classes generate more stable returns, particularly if rebalanced regularly management on... Sell those with low returns can reduce profit 26 ], Exchange-traded funds are branded as passively rather. Gains 100 points in a year, so a Survivorship Bias Correction is made primary sources to support their.! State Street Global Advisors has long engaged companies on issues of corporate governance ) an... As the chosen index are known as index fund management Dimensional fund Advisors ( DFA.. Stock lot size frequent buying and selling in an attempt to beat the market with several investing and... Approach to investing in the late 1960s and early 1970s this has been done ensuring!