Once again active v passive management of funds

Enable’s IFAs in Bishop’s Stortford once again notice that following comments by Prince Charles -that pension fund managers are letting savers down by focusing on the short term-  research by Evercore Pan-Asset has argued that the median passive fund has outperformed its active counterpart in 13 of the 14 most popular sectors over the past five years i.e. passive investment is better for the investor over the long term. It also claimed that the average performance gap between passive and active funds was 6.5 percentage points, blaming this on the impact of higher management charges and poor stock selection from active funds.

Many commentators expect the rise of passive products to continue as the end investor becomes increasingly cost conscious and options mature with the launch of more products like ETF’s. Head of retail at Artemis Richard Pursglove however argues that “active managers could stand to benefit as passive solutions become more popular”. “The more and more funds that flow into the passive side of our industry, in some ways the easier it is for active managers to outperform and the more opportunities this creates. With no active fund management industry, you don’t have a market,” he says. He also says there is an element of cyclicality behind the recent move to passives, as investors look to gain exposure to a rising stock market. This is likely to change, however, when the market hits its next stumbling block and passive funds, unlike active managers, fail to anticipate it.”

The passive v active debate is set to run and run and Enable’s IFAs are here to try and help you make sense of it all.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.