Independent Financial Life Planners Bishop's Stortford: Should Drawdown customers flood to active funds?

Tuesday, 25 August 2015

Should Drawdown customers flood to active funds?

Enable’s IFA’s in Bishops Stortford note that recent figures from Hargreaves Lansdown show “The first wave of drawdown customers post pension freedoms are backing active managers.” Their investors who opened drawdown contracts after 6 April shows just £1 in every £20 went into passive funds. It also suggests that UK equity income was the most popular fund sector, accounting for 27.55 per cent of all drawdown assets, while Lloyds Banking Group was the most popular individual stock.

Hargreaves senior analyst Laith Khalaf says: “What is particularly striking is there is clearly an appetite for growth, as well as income, which suggests investors are saving some of their jam for tomorrow, as well as using their pension pot to produce an income today. “Passive funds are not yet well represented amongst drawdown investors.”

But Enable would like to draw attention to the fact that contrary to the impression you might get from the advertising produced by the funds industry, very few active fund managers are able to consistently outperform the markets. For example, analysis of the UK All Companies sector at the end of 2010 showed that only 24% of actively managed funds managed to beat the benchmark stock market (the FTSE All Share) over the previous decade. In that case there would be a strong chance you could end up with a fund that fails to deliver you the return you could get by simply tracking the index with a passive fund. If you want to look what sort of funds are right for you Enable’s experienced IFA’s can talk you through your options.

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

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IFA Bishop's Stortford

At Enable Independent we know that our clients trust us and rely on our advice to help them to plan a better, more secure financial future. This is a responsibility that we take very seriously especially because we know that many clients have chosen us on the recommendation of friends and family. Each one of our advisers has deep expertise in their area of specialist knowledge and, as a team, we hold some of the highest qualifications available in the financial advice industry.

Our job satisfaction comes from using our skills to find workable, affordable and flexible solutions to meet our clients needs. Whether we are planning for known future funding requirements such as house purchase, school fees or income in retirement - or for the unforeseen such as job loss, long-term illness or early death, our independence from any product provider enables us to view the marketplace impartially. Our training permits us to look beyond a product's marketing hype and select on the basis of its fitness for purpose.