There are several factors to consider when comparing actively and passively managed investment funds but investment charges need to be close to the top. At Enable our IFA’s can fully explain any charges relating to an investment. Charges are often much higher for actively managed funds than passive funds as there is more work involved. Actively managed funds not only have higher management fees but they also trade more frequently which means more dealing charges. These funds can easily charge twice as much as passive funds even if they don't perform as well or they make a loss.
You might say higher charges would be justified if an actively managed fund outperformed a passively managed one. But this often is not always the case and once charges are taken into consideration, many tracker funds produce better returns than actively managed funds. However, some actively managed funds perform considerably better than the stock market and can offer real added value. Once you've decided which asset class/sector/stock market you want to invest in, picking a passive fund is simple. But actively managed funds add another layer to your investment decisions. You need to look at what funds are in that sector, and then choose which fund/fund manager you think will do best.
There are more actively managed funds than passive funds hence the greater choice but too much choice is not always a good thing. Why not let our experienced IFA’s at Enable help make some of those decisions a little bit easier.
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